Estate of Robert G. Kluener, Deceased, Donald E. Hathaway, Co-executor and Charlotte J. Kluener - Page 2

            Kluener's 1989 Federal income taxes (Robert G. Kluener and                                    
            Charlotte J. Kluener are sometimes hereinafter referred to as the                             
            Klueners, Robert G. Kluener is referred to individually as Mr.                                
            Kluener, and Charlotte J. Kluener is referred to individually as                              
            Ms. Kluener).  Unless otherwise noted, all section references are                             
            to the Internal Revenue Code in effect for the year in issue, and                             
            all Rule references are to the Tax Court Rules of Practice and                                
                  After concessions, the issues remaining for decision are                                
            whether petitioners are liable for:  (1) Income tax on the gain                               
            realized from the sales of certain horses that Mr. Kluener                                    
            transferred2 to his wholly owned corporation prior to the sales;                              
            and (2) the accuracy-related penalty provided by section 6662(a)                              
            for a substantial understatement of income tax.                                               
                                           FINDINGS OF FACT                                               
                  Some of the facts have been stipulated for trial pursuant to                            
            Rule 91.  The parties' stipulations of fact are incorporated                                  
            herein by reference and are found as facts in the instant case.                               
                  Mr. Kluener died on October 14, 1991.  At the time the                                  
            petition in the instant case was filed, the executors of Mr.                                  
            Kluener's estate were Donald E. Hathaway (Mr. Hathaway), who                                  

            of deficiency.  Respondent accordingly determined the deficiency                              
            and penalty in issue against his estate.                                                      
            2     The use of the words "transfer", "receive", "receipt",                                  
            "pay", and similar terms to describe the form of the transaction                              
            in issue does not indicate that we accept that the substance of                               
            that transaction accords with its form.                                                       

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