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Respondent determined a deficiency in petitioners' 1990
Federal income tax in the amount of $900, and an accuracy-related
penalty pursuant to section 6662(a) in the amount of $180. With
the exception of the section 6662(a) accuracy-related penalty,
all of the issues resulting from adjustments made in the notice
of deficiency have been conceded by petitioners.2 In their
petition, petitioners claim they are entitled to a capital loss
deduction not included on their original 1990 Federal income tax
return. Consequently, the issues for decision are: (1) Whether
petitioners are entitled to a deduction for a long-term capital
loss sustained in connection with the sale of a horse; and (2)
whether the underpayment of petitioners' 1990 Federal income tax
was due to negligence so as to render them liable for the
accuracy-related penalty under section 6662 for that year.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the exhibits attached thereto are
incorporated herein by this reference. During the year in issue,
petitioners were husband and wife and filed a joint Federal
income tax return. At the time the petition was filed,
2In addition to the issues framed by the pleadings,
respondent agrees that petitioners understated by $1,013, a
depreciation deduction claimed on their 1990 Federal income tax
return. Although no issue involving an additional depreciation
deduction is formally before the Court, the parties, in response
to a suggestion by the Court, have agreed that the allowance of
this additional depreciation deduction will be reflected in their
Rule 155 computations.
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Last modified: May 25, 2011