Frank H. and Marla C. Black - Page 8
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$3,000 to each of their children Dominique (born on October 27,
1983) and Jonathan (born on May 31, 1985). Petitioners claimed
Schedule C deductions on their 1992 joint return for payments of
$5,240 made to each of their children Dominique and Jonathan.
The notice of deficiency treated the full amounts of the payments
by Mr. Black to Dominique and Jonathan during 1991 and 1992 as
nondeductible for purposes of respondent’s net worth computation.
Mr. Black issued Forms 1099-MISC reporting the payments made
to Dominique and Jonathan in 1991 and 1992. Federal and State
income tax returns were filed for Dominique and Jonathan for the
taxable years 1991 and 1992 reporting the amounts shown on Forms
On December 3, 1991, Mr. Black met with C.P.A. Walter
Martinson to discuss various aspects of Mr. Black’s business.
One of the items discussed was the possibility of Mr. Black’s
paying his children. C.P.A. Martinson advised putting money in
an account for them in their names.
During the taxable year 1991, Mr. Black was a general agent
for Clark Capital Management Group (Clark Capital) and received
commissions from Clark Capital of $21,843.36. Petitioners did
not report any of the Clark Capital commission income on their
1991 joint return.
On July 26, 1985, petitioners submitted a consumer loan
application to Home Federal (Home Federal application). On the
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Last modified: March 27, 2008