Nancy Silverman and Estate of Sheldon Silverman, Deceased, Nancy Silverman, Executrix - Page 2

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                W's 1982 joint tax return.)  R abated $55,923 of H's and W's                 
                1980 tax liability, which (with interest, etc.) resulted in                  
                W’s receiving a refund check totalling $128,715.36 in 1988.                  
                     1.  Held:  The 1981 grossly erroneous item (the                         
                $1,600,000 deduction) is an item of H.  Sec. 6013(e)(1)(B),                  
                I.R.C. 1954.                                                                 
                     2.  Held, further, when the tax return was signed, W                    
                did not know, and had no reason to know, that there was a                    
                substantial understatement of tax for 1981.  Sec.                            
                6013(e)(1)(C), I.R.C. 1954.                                                  
                     3.  Held, further, in 1988 W received a substantial                     
                benefit from the 1981 grossly erroneous item (the $54,372.61                 
                that had been transferred from the 1981 account to the 1980                  
                account), and so it is not inequitable to hold W liable for                  
                the substantial understatement of 1981 tax resulting from                    
                that grossly erroneous item.  Sec. 6013(e)(1)(D), I.R.C.                     
                1954.                                                                        


                Gary S. Weinick, for petitioners.                                            
                Halvor N. Adams III, for respondent.                                         


                         MEMORANDUM FINDINGS OF FACT AND OPINION                             
                CHABOT, Judge:  Respondent determined deficiencies in                        
          Federal individual income tax and additions to tax under sections                  
          66591 (valuation overstatements) and section 6661 (substantial                     
          understatement of liability) against petitioners as follows:                       
                                           Additions to Tax                                  
                                                 Sec.                  Sec.                  
                Year       Deficiency            6659                  6661                  


          1     Unless indicated otherwise all section references are to                     
          sections of the Internal Revenue Code of 1954 as in effect for                     
          1981.                                                                              




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