- 4 - Kovacevich and his wife (Kovacevichs) maintained, at Farmers and Merchant’s Bank, a personal line of credit. On the corporate ledgers, Moe listed the checks written to Farmers and Merchants Bank and MBNA in the “Receivable from Officer” account. These checks had an “LN” memo description, indicating that the payment related to a loan or the “Receivable from Officer” account. From 1982 through 1992, petitioner sponsored a defined benefit plan for Kovacevich, its only participant. In 1982 and 1984, petitioner contributed $46,473 and $81,822, respectively, to the plan. Petitioner’s fiscal year ends on March 31. On its corporate income returns for 1994 and 1995, petitioner deducted officers’ compensation expenses in the amounts of $132,000 and $133,000, respectively. Kovacevich, in his capacity as president, amended petitioner’s 1991 Form 941, Employer's Quarterly Federal Tax Return, with the following statement: The amount of earnings of Employee Robert E. Kovacevich was not clear, hence was left off. The Employee paid all Income Tax due, hence the withholding is unnecessary. However the Social Security Tax is due. A completed W-2(c) term is included. On April 28, 1999, respondent sent petitioner a notice of determination, in which respondent determined that Kovacevich was an employee for Federal employment tax purposes and that petitioner was not entitled, pursuant to section 530, to relief from such classification. Enclosed with the notice ofPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011