2
Tax Court Rules of Practice and Procedure, except as otherwise
noted.
Petitioners have conceded that they are liable for a 10-
percent early distribution penalty applied to a $28,000
distribution from an individual retirement account during 1987.
The remaining issues for our decision are:
(1) Did petitioners have sufficient basis in Don C. Reser,
P.C., a solely owned subchapter S corporation, to claim
distributive losses greater than the amount allowed by
respondent? We hold that they did not.
(2) Is petitioner husband liable for self-employment tax due
on $15,000 of income which was earned by petitioner wife during
1987? We hold that he is not.
(3) Are petitioners liable for an addition to tax under
section 6651(a) for failure to timely file an income tax return
for 1987? We hold that they are.
(4) Are petitioners liable for additions to tax under
section 6653(a)(1) and section 6653(a)(1)(A) and (B) for the
intentional or negligent disregard of rules and regulations in
filing their 1987 and 1988 income tax returns? We hold that they
are.
(5) Are petitioners liable for additions to tax under
section 6661 for 1987 and 1988 for substantial understatement of
taxes? We hold that they are.
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