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11/30/95 11/30/96 11/30/97
Weeldreyer notice of deficiency adjustment
for food & lodging provided by Dreyer Farms $12,433 $19,919 $19,573
Food & lodging expenditures 9,908 12,448 12,975
Adjustment for rental value of residence 2,525 7,471 6,598
The Weeldreyers have not shown that the portion of the rent
attributable to the farmhouse is less than the amounts for the
years at issue, as computed above. We therefore hold that those
amounts are properly included in the Weeldreyers’ income for the
years at issue.
5. Summary of Adjustments to Weeldreyers’ Income
The Weeldreyers’ income from farming is increased by $2,525
in 1995, $7,471 in 1996, and $6,598 in 1997 to reflect the
disallowance of deductions for the rental value of the farmhouse.
In addition, the following personal expenses paid by Dreyer Farms
are included in the Weeldreyers’ income as constructive dividends
for the years at issue:
1995 1996 1997
Food $4,406 $7,179 $7,712
Utilities 1,694 2,362 2,235
Landscaping 256 216 --
Remodeling costs 1,729 -- --
Repairs and maintenance -- 82 --
Telephone –- –- 338
Total 8,085 9,839 10,285
Issue 2. Accuracy-Related Penalty Under Section 6662(a)
Respondent determined that Dreyer Farms is liable for the
accuracy-related penalty under section 6662(a). As pertinent
here, section 6662(a) imposes a 20-percent penalty on the portion
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