Perry Funeral Home, Inc. - Page 2

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               Edward DeFranceschi, David Klemm, and Jason Bell, for                  
               Louise R. Forbes, for respondent.                                      

                       MEMORANDUM FINDINGS OF FACT AND OPINION                        

               WHERRY, Judge:  Respondent determined the following                    
          deficiencies and penalty with respect to petitioner’s Federal               
          income taxes for the calendar years 1996 and 1997:                          
                    Year           Deficiency          I.R.C. Sec. 6662               
                    1996           $1,044,037          $106,877.80                    
                    1997           1,817                    --                        
          After concessions by the parties, the principal issues for                  
          decision are:                                                               
               (1) Whether payments received by petitioner under preneed              
          funeral contracts are includable in gross income during the year            
          of receipt or during the year in which the goods and services are           
          provided by petitioner; and                                                 
               (2) whether petitioner is liable for the section 6662                  
          accuracy-related penalty.1                                                  
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
          The stipulations of the parties, with accompanying exhibits, are            
          incorporated herein by this reference.                                      

               1 Unless otherwise indicated, section references are to the            
          Internal Revenue Code in effect for the years in issue, and Rule            
          references are to the Tax Court Rules of Practice and Procedure.            

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