Joseph D. & Elizabeth M. Dunne - Page 3
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(5) whether petitioners failed to report a $15,000 capital
gain on their 1999 Federal income tax return. We hold that they
did not, because we find that respondent’s determination as to
this item was arbitrary; and
(6) whether petitioners are liable for additions to tax
under section 6651(a)(1) for 1997 and 1999. We hold that they
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulated facts and the accompanying exhibits are
incorporated herein by this reference.
Petitioners resided in Sanford, North Carolina, at the time
they filed their petition.
FRC International, Inc.
Mr. Dunne incorporated FRC in Delaware in 1982. FRC’s
principal place of business was Holland, Ohio. FRC was in the
business of selling fire protection material, particularly a
chemical called halon, through contracts with the Federal
Government. FRC was an S corporation for all relevant periods.
Mr. Dunne was FRC’s sole shareholder from the time of its
incorporation until 1993. Mr. Dunne was also a director and an
employee of FRC. In 1993, Richard Marcus became a 50-percent
shareholder of FRC while Mr. Dunne continued to own the remaining
50 percent. Mr. Marcus also became the president of FRC and
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Last modified: March 27, 2008