Joseph R. Rollins - Page 1

                                 T.C. Memo. 2004-260                                  

                               UNITED STATES TAX COURT                                

                          JOSEPH R. ROLLINS, Petitioner v.                            
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 598-03.                Filed November 15, 2004.             

                    P caused the 401(k) plan of his wholly owned company to           
               lend money to three entities in which P owned minority                 
               interests.  P’s company is the sole trustee of, and the                
               administrator of, the 401(k) plan.  P also acted on the part           
               of the borrower entities in agreeing to the loans.                     
                    1.  Held:  Each of the loans was a “prohibited                    
               transaction” within the meaning of sec. 4975(c)(1)(D),                 
               I.R.C. 1986.  P, a disqualified person, is liable for                  
               excise taxes under sec. 4975(a) and (b), I.R.C. 1986;                  
               amounts to be determined.                                              
                    2.  Held, further, P is liable for additions to tax               
               under sec. 6651(a)(1), I.R.C. 1986, for failure to file                
               excise tax returns; amounts to be determined.                          

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