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Accuracy-Related Penalty
Year Deficiency Sec. 6662(a)
1999 $294,389 $55,165.20
2000 405,286 81,057.20
Following petitioner’s concessions, we decide whether petitioner
may deduct the officer compensation of $1,087,000 and $1,350,000
that it claimed on its 1999 and 2000 Federal income tax returns,
respectively. Respondent determined in the notice of deficiency
that petitioner may deduct only $303,020 and $157,982 of the
respective claimed amounts because petitioner had not shown that
any greater amount was reasonable and paid for services. We hold
that petitioner may deduct all of the claimed amounts but for
$180,260 in 1999.2 We also decide whether petitioner is liable
for the portion of the accuracy-related penalty attributable to
the $180,260. We hold it is not.
FINDINGS OF FACT
Some facts were stipulated and are so found. The
stipulation of facts and the accompanying exhibits are
incorporated herein by this reference. Petitioner is a C
corporation doing business as B & B Electric Sales. Its
2 On the basis of this holding, we also hold without further
discussion that petitioner is not liable for the portion of the
accuracy-related penalty attributable to respondent’s disallowed
compensation for 2000 or the portion of the accuracy-related
penalty attributable to respondent’s disallowed compensation
greater than $180,260 for 1999.
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