- 11 -
G. Notices of Deficiency
On January 25, 2001, respondent timely mailed to the
Schmidts a statutory notice of deficiency for 1995, 1996, and
1997 (the Schmidt notice of deficiency). Also on January 25,
2001, respondent timely mailed to Hillside Dairy a statutory
notice of deficiency for its fiscal years ended November 30,
1995, 1996, and 1997 (the Hillside Dairy notice of deficiency).
In the Hillside Dairy notice of deficiency, respondent
disallowed the food, lodging, and medical expenses deducted by
Hillside Dairy, totaling $14,527 for 1995, $17,988 for 1996, and
$17,845 for 1997. Respondent determined that (1) Hillside Dairy
failed to establish that the food and lodging expenses were
ordinary and necessary business expenses under section 162 and
(2) those items were the Schmidts’ personal expenses.
Respondent further determined that Hillside Dairy was liable for
the accuracy-related penalty under section 6662(a).
In the Schmidt notice of deficiency, respondent determined
that payments by Hillside Dairy of the Schmidts’ food, lodging,
and medical expenses resulted in constructive dividends as
follows:
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011