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Virginia Beach property, (4) telephone expenses of $271 attribut-
able to the Virginia Beach property, (5) child care expenses of
$3,321, and (6) depreciation of $5,454 attributable to the
Virginia Beach property.
As a result of the disallowance of the foregoing deductions,
respondent determined: (1) To decrease (a) the amount of the NOL
that Delaware Corporation claimed in Delaware Corporation’s 1995
return and (b) the amount of the NOL carryback from 1995 that
Delaware Corporation claimed in its 1993 return and 1994 return
and (2) to eliminate the NOL carryforward from 1995 that Delaware
Corporation claimed in its 1997 return. In Delaware Corpora-
tion’s notice, respondent further determined that Delaware
Corporation is liable for each of the years 1994 and 1997 for the
accuracy-related penalty under section 6662(a).
Ms. Havens’s Notice of Deficiency
Respondent issued a notice to Ms. Havens with respect to her
taxable years 1994 and 1995. In that notice, respondent deter-
mined that during 1994 Ms. Havens received constructive dividends
of $79,019 from Delaware Corporation, of which (1) $49,817 was
attributable to the 1994 Caroline County farm expenses that
Delaware Corporation paid during 1994 and (2) $29,202 was attrib-
13(...continued)
tion’s 1995 return, with respect to the Virginia Beach property
(i.e., $18,649) and the total amount of mortgage loan interest
deductions that respondent disallowed for that year with respect
to the Virginia Beach property (i.e., $11,676).
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