Estate of Leon Spear, Deceased, Jeanette Spear, Harvey Spear and Robert Spear, Administrators, and Jeanette Spear - Page 3

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                                     Discussion                                       
          A.   Estate of Spear v. Commissioner, T.C. Memo. 1993-213                   
               Jeanette and Leon Spear filed joint Federal income tax                 
          returns for 1975, 1976, and 1977.  Respondent determined that               
          petitioners are liable for deficiencies in income tax and                   
          additions to tax for fraud as follows:                                      
          Additions to Tax                                                            
                    Year      Deficiency          Sec. 6653(b)                        
                    1975      $51,271.70          $25,635.85                          
                    1976      157,706.46          78,853.23                           
                    1977      93,536.23           46,768.12                           
               Using the net worth plus expenditures method, respondent               
          determined that petitioners had unreported income in 1975, 1976,            
          and 1977.                                                                   
               Petitioner did not comply with an order of this Court to               
          testify at trial.  As a result, we sanctioned petitioners by                
          deeming that respondent made a prima facie showing of certain               
          facts alleged by respondent in paragraph 7 of the amended answer            
          (the deemed facts).  Estate of Spear v. Commissioner, T.C. Memo.            
          1993-213.  We upheld most of respondent's deficiency                        
          determinations and held that petitioners were liable for the                
          additions to tax for fraud.                                                 
          B.   Estate of Spear v. Commissioner, 41 F.3d 103 (3d Cir. 1994)            
               Petitioners appealed our decision in docket No. 3276-87.               
          The Court of Appeals vacated our decision and remanded the case             
          with instructions that we decide it without treating respondent             





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