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Penalties
Year Deficiency Sec. 6662 Sec. 6663
1998 $31,816 $4,063 $8,627
1999 76,768 9,250 22,887
After concessions by the parties, the issue for decision is
whether petitioners are entitled to a loss deduction for 1999 for
the cash that petitioner Edman Hackworth forfeited to the State
of South Carolina as a result of his violation of South
Carolina’s gambling laws.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure. All amounts have been rounded to the nearest dollar.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference. At the
time that the petition in this case was filed, petitioners
resided in Greer, South Carolina.
Background
During 1998 and 1999, petitioner Edman Hackworth
(petitioner) owned and operated Sand Trap, Inc., an
S corporation. Sand Trap, Inc., operated a bar named “Sand Trap
Lounge” (the Sand Trap) in Greenville, South Carolina, during
those years.
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Last modified: May 25, 2011