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Additions to Tax
Sec. Sec. Sec. Sec.
Year Deficiency 6653(b)(1) 6653(b)(1)(A) 6653(b)(1)(B) 6661(a)
1986 $58,761 --- $44,071 1 $14,690
1987 43,247 --- 32,435 1 10,812
1988 156,393 $117,295 --- --- 39,098
1 50 percent of the interest due on the portion of the underpayment
attributable to fraud.
The issues for decision are:2 (1) Whether petitioner realized income
from a corporation's payment of his personal expenses. We hold that he did.
(2) Whether petitioner understated his gross income by not including deposits
to his personal bank account for tax year 1988. We hold that he did. (3)
Whether petitioner understated his income on Schedule C and Schedule E. We
hold that he did to the extent stated herein. (4) Whether petitioner
understated his capital gain income for tax year 1988. We hold that he did to
the extent stated herein. (5) Whether petitioner is entitled to net operating
loss and/or a business credit carryforward to the years in issue. We hold
that he is not. (6) Whether petitioner is liable for the addition to tax for
negligence under section 6653(a)3 for all the years in issue. We hold that he
is liable. (7) Whether petitioner is liable for the addition to tax for
failure to timely file his Federal tax returns for 1986 and 1987 under section
6651(a). We hold that he is liable. (8) Whether petitioner is liable for the
2
Respondent has made concessions as to Schedule C expenses,
schedule A expenses, and Schedule E expenses to the extent
petitioner was able to substantiate the deductions. Respondent
has conceded that certain amounts asserted as conversion of funds
were in fact gifts and therefore not taxable. Respondent has
conceded that the capital gain income asserted for tax year 1988
was overstated by $150,000. Respondent has conceded that
petitioner is not liable for the addition to tax for fraud.
3
All section references are to the Internal Revenue Code in
effect for the taxable years in issue, and all Rule references
are to the Tax Court Rules of Practice and Procedure, unless
otherwise indicated.
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Last modified: May 25, 2011