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a penalty under section 6662(a)1 in the amount of $3,306. After
concessions,2 the issues for decision are:
(1) Whether $37,898 received by petitioners was a tax-free
inheritance under section 102(a) or the proceeds from the sale of
property;
(2) whether petitioners may deduct legal expenses in excess
of the amount allowed by respondent; and
(3) whether petitioners are liable for the accuracy-related
penalty either under section 6662(b)(1) for negligence or
disregard of rules or regulations, or section 6662(b)(2) for any
substantial understatement of income tax.
FINDINGS OF FACT
Capital Gain vs. Inheritance
Petitioners, Maria F. Marcus (Mrs. Marcus) and M. Bennett
Marcus (Mr. Marcus), were married to each other at all relevant
times. They resided in Anaheim, California, at the time the
petition was filed. Mrs. Marcus' mother, Matilde Parisi Suvich
(Mrs. Suvich), had two other daughters, Gabriella and Claudia
1 Unless otherwise indicated, 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
Procedure.
2 Petitioners conceded respondent's additions to income of
$13,026 in miscellaneous income, $2,625 in interest income, and
$3,529 in capital gain income from a mutual fund sale.
Petitioners also conceded respondent's reduction of automobile
depreciation from $4,200 to $2,159.
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