Corporation Challenges Deficiency, Penalty in Tax Court

W G WADE SHOWS INC.,
Petitioner,
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent.

UNITED STATES TAX COURT

PETITION

NOW COMES Petitioner, by and through its attorneys Venar R. Ayar and Hayden Leithauser and hereby petitions for a redetermination of the deficiencies set forth by the Commissioner of Internal Revenue's Notice of Deficiency, dated September 07, 2022, and states as follows:

1. Petitioner's legal mailing address is PO Box 61730, Livonia, MI 48151.

2. The Notice of Deficiency, attached hereto as Exhibit A, is dated September 07, 2022, and was issued by the Department of the Treasury, Internal Revenue Service, P.O. Box 330500, STOP 16, Detroit, MI 48232-6500.

3. The deficiencies determined by the Commissioner are as follows, all of which are in dispute:

a. An increase in tax, or tax deficiency, for the tax year ending on December 31, 2018, in the amount of $190,629.00

b. An accuracy-related penalty under I.R.C. § 6662(a) for the tax year ending on December 31, 2018, in the amount of $38,125.80.

4. The determination of the tax set forth in the Notice of Deficiency are based upon the following errors:

a. The Commissioner erred in disallowing $907,756.00 of contracted services and in determining the Petitioners failed to prove the expenses were incurred during the taxable year and that the expenses were ordinary and necessary to the business.

b. The Commissioner erred in determining there should be an accuracy-related penalty under I.R.C. § 6662 for the tax year ending on December 31, 2018, in the amount of $38,125.80.

5. Petitioner relies on the following facts as the basis of this case:

a. Petitioner was entitled to the full amount of deductions for other deductions, contracted services, reported on the return, as those expenses were paid in the tax year, can be fully substantiated through journals, receipts, and/or testimony, and were ordinary and necessary to the Petitioners' business.

b. There was no substantial understatement of tax, but if there was an understatement of tax, Petitioner had reasonable cause for reporting their income and expenses as they had on their tax return for the tax year ending on December 31, 2018; there was no negligence or disregard of rules or regulations.

WHEREFORE, Petitioner prays that this Court may hear the proceeding and:

1. Determine that the Commissioner erred as alleged in this Petition,

2. Find that there are no deficiencies or additions to tax due from the Petitioner for tax year 2018,

3. Determine that there is an overpayment for the tax year ending on December 31, 2018, and

4. Grant any further relief this Court deems proper.

Respectfully Submitted,

Dated: November 15, 2022

By: Venar R. Ayar (Tax Court Bar No. AV0037)
30095 Northwestern Hwy, Suite 102
Farmington Hills, MI 48334
(248) 262-3400
venar@ayarlaw.com
COUNSEL FOR PETITIONER

By: Hayden Leithauser (Tax Court Bar No. LH21034)
30095 Northwestern Hwy, Suite 102
Farmington Hills, MI 48334
(248) 262-3400
hayden@ayarlaw.com
COUNSEL FOR PETITIONER