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Addition to Tax and Penalties
Year Deficiency Sec. 6661 Sec. 6662(a)
1988 $11,351 $2,838 ---
1989 11,536 --- $2,307
1990 10,058 --- 2,012
After concessions, the issues for decision are:
(1) Whether petitioners' horse activity during the taxable years
at issue was engaged in for profit. We hold that it was not.
(2) Whether petitioners are liable for the addition to tax under
section 6661 for a substantial understatement for taxable year
1988. We hold that they are.
(3) Whether petitioners are liable for the accuracy-related
penalty under section 6662(a) for a substantial understatement
for taxable years 1989 and 1990. We hold that they are.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and attached exhibits are incorporated
herein. At the time the petition was filed, petitioner2 resided
in Phoenix, Arizona. All references to petitioner in the
singular are to Richard H. Daley.
1(...continued)
Procedure.
2Anne H. Daley died during taxable year 1989, and petitioner
Richard H. Daley is the executor of Anne H. Daley's estate.
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