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(6) whether petitioner is liable for additions to tax under
section 6651(a)(1) for tax years 1998, 1999, and 2000. We hold
that he is.
(7) whether petitioner is liable for accuracy-related
penalties under section 6662(a) for disallowed deductions. We
hold that he is not liable for those penalties in 1998 and 1999.
Background
Petitioner was a resident of Prospect, Kentucky, at the time
he filed his petition. Petitioner was the former president and
chief executive officer (CEO) of the Allegheny Health Education &
Research Foundation (AHERF), a Pennsylvania corporation. AHERF
terminated petitioner in June 1998 and filed chapter 11
bankruptcy proceedings 1 month later in July of that year.
A. 1998 Charitable Deduction
In 1990, petitioner sold his home to a subsidiary of AHERF,
Jellico, Inc. (Jellico). In 1992, petitioner signed a land
installment contract with Jellico to repurchase the home for
$1,280,000 with payment spread over 20 years. The terms of this
contract required petitioner to pay 5 percent of the principal
($64,000) each April 30th and interest payments of 7.5 percent on
the remaining principal each October 30th. The contract also
required petitioner to pay all taxes due on the residence.
Jellico retained title during the contract period and would
transfer title when petitioner paid the full contract price. If
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