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section 104(a)(2).1 We find that respondent’s determination was
in error regarding $1,257,500 of the amount in dispute.
FINDINGS OF FACT
Petitioners were married and filed a joint Federal income
tax return for 1992. Respondent issued a notice of deficiency to
petitioners on October 10, 1996. Petitioners timely petitioned
this Court. At the time they filed the petition, petitioners
resided in Los Angeles, California.
Mr. Wright died on January 1, 1999, at the age of 78. Mrs.
Wright had died on January 1, 1998. Their daughter was appointed
as the administratrix of her parents’ estates by the Superior
Court of California for the County of Los Angeles.
In the mid-1960s, Mr. Wright organized Marvin Engineering
Co., Inc. (MEC), a California corporation, with Marvin Gussman
and Gerald Friedman. MEC’s primary business was making parts for
the aerospace and defense industries. Mr. Gussman served as the
president and chief executive officer, and Mr. Friedman served as
the chief financial officer. Mr. Wright was an engineer for MEC
and worked in production and the development of new products.
Mr. Wright was also a director of MEC.
1Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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