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In the alternative to the additions to tax pursuant to section
6653(b)(1) and (2) for 1984 and 1985, respondent determined the
negligence additions to tax pursuant to section 6653(a)(1) in the
respective amounts of $623 and $650, and under section 6653(a)(2),
in the respective amounts of 50 percent of the interest due on
$12,454 and $13,007. In the alternative to the additions to tax
under section 6653(b)(1)(A) and (B) for 1986, respondent determined
a $1,122 addition to tax under section 6653(a)(1)(A), and an
addition to tax under section 6653(a)(1)(B) in the amount of 50
percent of the interest due on $22,442.
All section references are to the Internal Revenue Code in
effect for the years under consideration. All Rule references are
to the Tax Court Rules of Practice and Procedure.
The issues for decision are: (1) Whether petitioners
underreported their income and overstated Schedule C deductions for
1984, 1985, and 1986, as determined by respondent; (2) whether
petitioners are liable for the additions to tax for fraud pursuant
to section 6653(b) for 1984, 1985, and 1986; or in the alternative,
whether petitioners are liable for the additions to tax for
negligence pursuant to section 6653(a); (3) whether petitioners are
liable for the additions to tax for substantial understatements of
income tax pursuant to section 6661 for 1984, 1985, and 1986; and
(4) whether the statute of limitations bars respondent's assessment
and collection of petitioners' Federal income taxes.
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