4
years 1984 and 1985, and under section 6653(a)(1)(A) and (B) for
the taxable year 1986. We hold that she is not.
(8) Whether petitioner Sands is liable for an addition to
tax under section 6661 for a substantial understatement of tax
for each of the taxable years 1984, 1985, and 1986. We hold that
she is.
(9) Whether petitioners Heller and Murphy are liable for an
accuracy-related penalty for a substantial understatement of
income tax under section 6662 for the taxable year 1989. We hold
that they are.
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, unless otherwise
indicated.
We have combined our findings of fact and opinion. Some of
the facts are stipulated and are so found. We incorporate by
reference the stipulation of facts and attached exhibits.
At the time the petitions were filed, Kenneth and Maria
Heller and Camille D. Sands (Sands) resided in New York, New
York, and Patrick J. Murphy (Murphy) resided in Brooklyn, New
York. Murphy, an attorney, was the only witness at trial.
These cases relate to Lone Star in which Sands, Kenneth
Heller (Heller), and Murphy were each general partners.
Respondent determined deficiencies as to Sands for the taxable
years 1984, 1985, and 1986 on the theory that the deductions
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