- 2 -
Accuracy-Related
Additions to Tax Penalty
Petitioner Deficiency Sec. 6651(a) Sec. 6654 Sec. 6652
R. Paul Kropp $36,135 $8,797.50 $1,848.30 –-
Lorna B. Kropp 9,596 –- –- $1,919
Unless otherwise noted, 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.
After concessions,1 we must decide: (1) Whether $81,000
withdrawn from a joint checking account (joint account) by one of
the petitioners is considered taxable compensation for services
rendered or a nontaxable gift, (2) whether petitioners are liable
for self-employment tax on account of the $81,000 withdrawal, and
(3) whether the additions to tax and accuracy-related penalty
apply.
FINDINGS OF FACT
The stipulation of facts, the second stipulation of facts,
and the attached exhibits are incorporated herein by reference.
At the time R. Paul Kropp (hereinafter Paul) and Lorna B. Kropp
1 The parties stipulate that during 1994, R. Paul Kropp
(hereinafter Paul) received the following income: Capital gains
of $1,369, dividends of $1,646, interest of $214, and rent of
$12,000. The parties also stipulate that during 1994, Lorna B.
Kropp (hereinafter Lorna), Paul’s wife, earned wages of $12,549.
Respondent argues that pursuant to applicable community property
laws, Paul and Lorna must each report one-half of the couple’s
combined income. Petitioners do not contest respondent’s
position. We therefore find that petitioners concede this issue.
See Petzoldt v. Commissioner, 92 T.C. 661, 683 (1989).
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Last modified: May 25, 2011