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tax and accuracy-related penalties under section 66621 for 1995,
1996, and 1997 as follows:
Ricky & Suzetta Schmidt, Docket No. 5267-01:
Penalty
Year Deficiency Sec. 6662(a)
1995 $4,550 --
1996 3,715 --
1997 2,827 --
Hillside Dairy, Inc., Docket No. 5268-01:
Year Penalty
Ended Deficiency Sec. 6662(a)
11/30/95 $2,179 $435.80
11/30/96 2,698 539.60
11/30/97 1,846 369.20
The issues for decision are:
(1) Whether amounts paid by Hillside Dairy, Inc. (Hillside
Dairy or the corporation), to provide medical care, food, and
lodging to its shareholders, Ricky Schmidt (Mr. Schmidt) and
Suzetta J. Schmidt (Mrs. Schmidt) (collectively the Schmidts),
and their children are (a) constructive dividends, as respondent
maintains, or (b) employee medical care expenses and/or
reimbursed employee expenses that are excluded from the Schmidts’
gross income and deductible by Hillside Dairy as ordinary and
necessary business expenses, as petitioners maintain; and
1All section references are to the Internal Revenue Code in
effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
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Last modified: May 25, 2011