- 22 - Mr. Kelly contests respondent's determination on the ground that petitioners adequately disclosed the facts relevant to their deduction of Mr. Kelly's trading losses. For purposes of section 6661, disclosure is adequate if it is made on a properly completed Form 8275, on a statement attached to the return in a form prescribed by the regulations, or on the return, provided that the taxpayer provides sufficient facts to enable the Internal Revenue Service to identify the potential controversy. Schirmer v. Commissioner, 89 T.C. 277, 285-286 (1987); S. Rept. 97-494 at 274 (1982); sec. 1.6661-4(b), Income Tax Regs. The Schedules C filed with petitioners' tax returns for 1986 and 1987 show the computation of the net loss and identify Mr. Kelly's principal business as "options dealer". Petitioners did not disclose the relevant facts affecting the tax treatment of the losses. Although the identification of Mr. Kelly's business as "options dealer" is highly relevant, it was conclusory, and we have found it to be inaccurate. The scant information on the 1986 and 1987 returns is consistent with the position that the losses are ordinary, and would not have apprised the Internal Revenue Service of a potential controversy over characterization. The additions to tax under section 6661 are sustained.5 5Mr. Kelly also contests respondent's method of computing petitioners' liability for the addition to tax under sec. 6661. He contends that in computing the amount of the "underpayment" for purposes of sec. 6661, respondent improperly failed to give (continued...)Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Next
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