Manuel Francisco Palomo and Jane Lyon Potter - Page 3

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                    The decision to be entered is not reviewable by any other court,                                                                                       
                    and this opinion should not be cited as authority.                                                                                                     
                              Respondent determined a deficiency of $7,884 in petitioners'                                                                                 
                    1999 Federal income tax and an accuracy-related penalty of                                                                                             
                    $1,577.  After concessions,1 the issues remaining for decision                                                                                         
                    are:  (1) Whether petitioners received unreported income; (2)                                                                                          
                    whether petitioners are subject to additional tax for an early                                                                                         
                    distribution from a qualified retirement plan; and (3) whether                                                                                         
                    petitioners are liable for the accuracy-related penalty due to                                                                                         
                    negligence.                                                                                                                                            
                                                                           Background                                                                                      
                              Some of the facts have been stipulated and are so found.                                                                                     
                    The exhibits received into evidence are incorporated herein by                                                                                         
                    reference.  At the time the petition in this case was filed,                                                                                           
                    petitioners resided separately in Northampton, Massachusetts.                                                                                          
                              Petitioner Manuel Francisco Palomo is an attorney.                                                                                           
                    Petitioner Jane L. Potter organized and directed the Parent                                                                                            
                    Teacher Organization's (PTO) after-school program at Smith                                                                                             
                    College Campus School (Smith).  In 1999, Ms. Potter was in charge                                                                                      
                    of the program, planned individual sessions, and was responsible                                                                                       


                              1 In the notice of deficiency respondent determined that                                                                                     
                    petitioners were liable for additional tax relating to the                                                                                             
                    failure to include income from Norman Ross Publishing, Inc.; for                                                                                       
                    unreported distributions from a qualified retirement plan; for an                                                                                      
                    unreported Mass. State tax refund; and, for unreported interest                                                                                        
                    earned from a bank account.  These issues have been resolved by                                                                                        
                    the parties.                                                                                                                                           




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