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determination for Mrs. Sparrow, and respondent reflected each of
these determinations in separate notices of deficiency.
Respondent determined the following deficiencies in, and
additions to, petitioners’ taxes:
Robert D. Sparrow, docket No. 7127-94
Additions to Tax
Sec. Sec. Sec.
Year Deficiency 6653(b)(1) 6653(b)(1)(A) 6661
1986 $12,742 --- $9,557 $3,186
1987 71,509 --- 53,632 17,877
1988 49,835 $37,376 --- 12,459
N. LaRae Sparrow, docket No. 7128-94
Additions to Tax
Sec. Sec.
Year Deficiency 6651(a)(1) 6661
1986 $12,742 $3,186 $3,186
1987 71,742 --- 17,877
1988 49,835 12,459 12,459
Respondent also determined that Mr. Sparrow was liable for the
addition to tax under section 6653(b)(1)(B) on the entire
deficiency for 1986 and 1987, and that petitioners were liable
for increased interest under section 6621(c) on the entire
deficiency in each year.
Following a consolidation of the cases, we must decide:
1. Whether petitioners underreported their gross income for
1986, 1987, and 1988, by failing to report proceeds from the
sales of stock. We hold they did.
2. Whether petitioners failed to report $10,000 in
consulting fees received by Mr. Sparrow in 1986, and, if they
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