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Cal Interiors Inc., docket No. 8052-01
Fiscal Year Ended Deficiency Sec. 6662(a)
April 30, 1997 $43,156 $8,631.20
S & C Dent Corp., docket No. 8053-01
Fiscal Year Ended Deficiency Sec. 6662(a)
April 30, 1997 $5,298 $1,059.60
Cal Interiors Inc., docket No. 10869-01
Fiscal Year Ended Deficiency Sec. 6662(a)
April 30, 1998 $21,496 $4,299.20
April 30, 1999 17,837 $3,567.40
Gary & Dolores Beecher, docket No. 10870-01
Year Deficiency Sec. 6662(a)
1997 $150,774 $30,154.80
1998 72,822 14,564.40
1999 63,961 12,792.20
The cases resulting from these petitions are now before us
consolidated for purposes of trial, briefing, and opinion.
Following concessions by the parties, we are left to decide
whether the recharacterization rule of section 1.469-2(f)(6),
Income Tax Regs., is valid as applied to net income realized by
Gary and Dolores Beecher (collectively, the Beechers) on the
rental of space in their home to two wholly owned C corporations
(collectively, the corporations); the Beechers materially
participated in the business activities of the corporations. We
hold that the recharacterization rule of the regulations is
valid. Unless otherwise stated, section references are to the
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