-3-
income in 1990. We hold that they did.
(3) Whether petitioners are liable for the accuracy-related
penalty pursuant to section 6662. We hold that they are.
All section references are to the Internal Revenue Code in
effect for the year under consideration. All Rule references are
to the Tax Court Rules of Practice and Procedure.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. The
stipulation of facts and the attached exhibits are incorporated
herein by this reference.
Background
Petitioners, husband and wife, resided in Bowling Green,
Kentucky, at the time they filed their petition. They timely filed
a joint Federal income tax return for 1990, the year under
consideration.
Petitioners own all the stock of Land Air Delivery, Inc.
(Delivery or the corporation), an air freight motor carrier that
engages in the pickup and delivery of packages for overnight
carriers. Joseph P. Schneller (petitioner) started Delivery in
1963 with a single truck. At its peak, Delivery operated 250
trucks and delivered freight nationwide. For all periods relevant
to this case, petitioner was the president and Mrs. Schneller was
the secretary of Delivery.
Delivery has been a subchapter C corporation from its
inception. Corporate income tax returns (Forms 1120) were filed
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