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ciency in, and additions to, petitioners' Federal income tax:
Section Section Section
Year Deficiency 6653(a)(1)(A)2 6653(a)(1)(B) 6661(a)
1987 $13,912.00 $695.60 * $3,478.00
* 50 percent of the interest due on the portion of the underpay-
ment due to negligence. Respondent determined that the entire
underpayment was attributable to negligence.
The issues for decision are:
(1) Did petitioners have unreported income for 1987 attrib-
utable to services provided by petitioner Terry R. Hardtke (Mr.
Hardtke) to T.R. Hardtke Insurance Agency, Inc. (Agency)? We
hold that they did.
(2) Are petitioners liable for self-employment tax for
1987? We hold that they are.
(3) Are petitioners liable for 1987 for the additions to
tax for negligence under section 6653(a)? We hold that they are.
(4) Are petitioners liable for 1987 for the addition to tax
for a substantial understatement of income tax under section
6661(a)? We hold that they are.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
Petitioners resided in New Almaden, California, at the time
the petition was filed.
During 1987, Agency was a California corporation that
2 All section references are to the Internal Revenue Code in
effect for 1987. All Rule references are to the Tax Court Rules
of Practice and Procedure.
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