                        T.C. Memo. 2000-391



                      UNITED STATES TAX COURT



                  ROBERT C. GEIB, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7109-98.            Filed December 28, 2000.


     Robert C. Geib, pro se.

     Mark A. Ericson and Laurence D. Ziegler, for respondent.



                        MEMORANDUM OPINION


     FOLEY, Judge:   By notice dated January 15, 1998, respondent

determined deficiencies in, and additions to, petitioner’s

Federal excise taxes as follows:
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                    Excise Taxes                  Addition to Tax
Year           Sec. 4975(a)   Sec. 4975(b)        Sec. 6651(a)(1)

1988                $409           --                  $102
1989                 901           --                   225
1990               1,897           --                   474
1991               3,160           --                   790
1992               4,809           --                 1,202
1993               6,660           --                 1,665
1994               8,737           --                 1,311
19981                --         $174,761                --
        1
            For the taxable period ending January 15, 1998.

        Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the years in issue, and

all Rule references are to the Tax Court Rules of Practice and

Procedure.       After concessions, the issue is whether respondent is

precluded from assessing the deficiencies and additions.

                                Background

        The parties submitted this case fully stipulated pursuant to

Rule 122.       When the petition was filed, petitioner resided in

Akron, Ohio.       During 1988 and 1990, petitioner was married.

        During 1988 through 1990, petitioner was president,

director, and majority stockholder (i.e., owner of at least 51

percent of the stock) of Cotter Merchandise Storage Co. (the

company).       The company maintained the Cotter Merchandise Storage

Co. Defined Benefit Pension Plan (the plan), which met the

requirements of section 401.       Petitioner was a trustee and

participant of the plan.
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I.    Loans

      Petitioner took unsecured loans, each bearing 12 percent

annual interest and a due date of January 1, 1992, from the plan

as follows:

                   Date                     Amount

              Mar. 1, 1988                  $62,000
              Mar. 7, 1988                   20,000
              Apr. 16, 1990                  10,000
              Apr. 19, 1990                 100,000
              Apr. 20, 1990                   6,000
              Apr. 30, 1990                   6,000
              May 19, 1990                    6,500

The plan allowed loans to participants but limited the amount of

any loan, required a Qualified Waiver of Spouse from the

participant taking the loan, and stipulated that the loan be

secured by the participant’s entire interest in the plan’s trust

fund.   Petitioner’s loans were made in excess of the plan’s

amount limitations and without a Qualified Waiver of Spouse.

Petitioner partially repaid the May 19, 1990, loan, but did not

make any other repayments or file Form 5330, Return of Excise

Taxes Related to Employee Benefit Plans.

II.   Other Cases

      On November 2, 1990, the company filed a voluntary petition

for reorganization under chapter 11 of the Bankruptcy Code (the

bankruptcy case).      In the bankruptcy case, the Commissioner

asserted a section 4971 deficiency against the company for
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failure to satisfy the minimum funding standard pursuant to

section 412.

     In 1994, petitioner was indicted and charged with seven

counts of bankruptcy fraud for unauthorized postpetition (i.e.,

after November 2, 1990) transfers of company funds and one count

of embezzling, on April 19, 1991, approximately $100,000 from the

plan (the criminal case).   On August 22, 1995, petitioner entered

into a plea agreement in which he pleaded guilty to three counts

of bankruptcy fraud and the embezzlement charge.

                            Discussion

     Respondent determined that the loans were prohibited

transactions pursuant to section 4975.     Petitioner contends that

respondent is precluded, pursuant to the Double Jeopardy Clause,

see U.S. Const. amend. V, from assessing the deficiencies and

additions.

I.   Excise Taxes

     Section 4975 imposes two tiers of excise taxes on a

prohibited transaction.   The first tier is 5 percent of the

amount involved in a prohibited transaction for each year, or

part thereof, in the taxable period.     See sec. 4975(a).   If the

first-tier excise tax applies and the transaction is not

corrected within the taxable period, a 100-percent second-tier

tax is imposed on the amount involved.     See sec. 4975(b).
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     The lending of money or other extension of credit between a

plan and a disqualified person generally is a prohibited

transaction.   See sec. 4975(c)(1)(B).   The plan lent money to

petitioner, who failed to make full repayment when due.    As a

trustee, majority stockholder, president, and director,

petitioner was a disqualified person.    See sec. 4975(e)(2);

Rutland v. Commissioner, 89 T.C. 1137, 1145 (1987) (stating that

the determination of whether an individual is a disqualified

person is made as of the time the loans originated).

     Section 4975(d) provides that any loan made by a plan to a

disqualified person who is a participant of the plan shall not be

prohibited if the loan meets certain criteria (e.g., if the loan

is available to all participants or beneficiaries on a reasonably

equivalent basis, is made in accordance with specific plan

provisions regarding loans, and is adequately secured).    See sec.

4975(d)(1).    Petitioner’s loans do not meet the criteria because

the loans were not made in accordance with specific provisions

relating to the loans set forth in the plan (i.e., the loans were

made in excess of the plan’s amount limitations and without a

Qualified Waiver of Spouse) and were not adequately secured.      See

sec. 4975(d)(1)(C), (E).   Therefore, petitioner’s loans were

prohibited transactions to which the first-tier excise tax is

applicable.
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      A prohibited transaction may be corrected by “undoing the

transaction to the extent possible, but in any case placing the

plan in a financial position not worse than that in which it

would be if the disqualified person were acting under the highest

fiduciary standards.”   Sec. 4975(f)(5).   Where the prohibited

transaction is the lending of money, the disqualified person may

correct the transaction by repaying the principal plus reasonable

interest.   See Medina v. Commissioner, 112 T.C. 51, 55 (1999).

Petitioner’s partial repayment did not correct the transactions.

Therefore, the second-tier excise tax is also applicable.

II.   Preclusion

      Petitioner contends that, following the criminal and

bankruptcy cases, respondent’s determinations “represent double

jeopardy”, and “no additional issues should arise.”    We disagree.

The criminal case, the bankruptcy case, and the company’s section

4971 deficiency do not relate to petitioner’s loans.    See United

States v. Beaty, 147 F.3d 522 (6th Cir. 1998) (stating that

double jeopardy protection applies to successive punishments for

the same crime and taxes do not constitute criminal punishment).

Consequently, we conclude that petitioner’s contention is

meritless, and respondent is not precluded from assessing the

deficiencies and additions.
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III.    Additions to Tax

       Each disqualified person liable for section 4975(a) excise

taxes relating to a prohibited transaction shall file Form 5330

relating to each taxable year, or part thereof, in the taxable

period.    See sec. 6011; sec. 54.6011-1(b), Pension Excise Tax

Regs.    Section 6651(a)(1) imposes an addition to tax for failure

to file a required return, unless petitioner establishes that

such failure is due to reasonable cause and not willful neglect.

Petitioner failed to file excise tax returns for the years in

issue and has failed to establish that he had reasonable cause

not to file such returns.    Accordingly, petitioner is liable for

the section 6651(a)(1) additions to tax.

       Contentions we have not addressed are moot, irrelevant, or

meritless.

       To reflect the foregoing,



                                                Decision will be entered

                                           under Rule 155.
