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4. All substantiated expenses allowed under the
I.R.C. attributable to Stejskal Enterprises Trust,
Bioactive Kansas Trust, and Total Health Center Trust
are properly reportable by Petitioners Kenneth W.
Stejskal, Sr. and Jane Stejskal on their Individual
Income Tax Return, Form 1040.
At trial, petitioners conceded the addition to tax under section
6651(a)(1) and the penalty under section 6662 with respect to
Kenneth W. Stejskal, Sr., and Jane Stejskal (petitioners). After
these concessions, the issues for decision are whether gross
receipts reported by Bioactive Kansas Trust were counted twice
when the income of the several trusts was reallocated to
petitioners and whether petitioners are entitled to cost of goods
sold in excess of that allowed by respondent.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference.
Petitioners resided in Texas at the time that they filed their
petitions. In 1977, petitioners incorporated Stejskal
Enterprises, Inc. Stejskal Enterprises, Inc., operated retail
stores in Kansas selling health supplements and other products.
Petitioners were corporate officers and were actively involved in
the operations of Stejskal Enterprises, Inc.
Stejskal Enterprises, Inc., elected to be taxed as an S
corporation commencing on or about January 1, 1994. During 1999,
the businesses formerly conducted by Stejskal Enterprises, Inc.,
were primarily conducted under the name Stejskal Enterprises
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