T.C. Memo. 2005-287
UNITED STATES TAX COURT
JOSEPH A. AND SARI F. DEIHL, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 11136-02, 16293-02, Filed December 15, 2005.
1024-03.
During 1996, 1997, and 1998, Ps operated a
multilevel marketing enterprise through two related S
corporations, M and K.
Held: Ps are entitled to deductions claimed
through and in connection with expenditures of M and K
as redetermined herein for 1996, 1997, and 1998.
Held, further, Ps are not entitled to include in
cost of goods sold for M an amount claimed for
purchases in 1998.
Held, further, Ps are not entitled to a reduction
in adjusted gross income of $550,000 for 1996.
Held, further, Ps are liable for accuracy-related
penalties pursuant to sec. 6662, I.R.C., for 1996,
1997, and 1998.
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