Charles R. Harp and April B. Harp - Page 2

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                    The issues remaining for decision are:                                                                                                                 
                              (1)  Do petitioners have unreported income for each of the                                                                                   
                    years 1989 and 1990?  We hold that they do to the extent stated                                                                                        
                    herein.                                                                                                                                                
                    (2)  Are petitioners liable for self-employment tax for each                                                                                           
                    of the years 1989 and 1990?  We hold that they are to the extent                                                                                       
                    stated herein.                                                                                                                                         
                              (3) Are petitioners liable for the accuracy-related penalty                                                                                  
                    under section 6662(a) for each of the years 1989 and 1990?  We                                                                                         
                    hold that they are to the extent stated herein.                                                                                                        
                                                                     FINDINGS OF FACT                                                                                      
                              Some of the facts have been stipulated and are so found.                                                                                     
                              Petitioners resided in Hillsboro, Oregon, at the time the                                                                                    
                    petition was filed.  They filed joint Federal income tax returns                                                                                       
                    (returns) for the years 1989 and 1990.                                                                                                                 
                    Charles Harp Construction                                                                                                                              
                              During the years at issue, petitioner Charles R. Harp,2 who                                                                                  
                    as of the time of the trial herein had a high school education                                                                                         
                    and had not received any formal training in accounting or book-                                                                                        
                    keeping matters, operated a sole proprietorship under the name                                                                                         
                    "Charles Harp Construction" (sole proprietorship) that he had                                                                                          
                    started in 1984 and that engaged in the residential construction                                                                                       


                    2  Hereinafter, references to petitioner in the singular are to                                                                                        
                    petitioner Charles R. Harp.                                                                                                                            




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