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Respondent's answer asserted the section 6662(a) accuracy-related
penalty in the alternative to the section 6663(a) fraud penalty.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
After concessions by respondent, the issues remaining for
decision are: (1) Whether petitioners received unreported income
during the years in issue, including income from their wholly
owned S corporation during 1991; (2) whether petitioners are
liable for the section 6651(a)(1) addition to tax for 1991; and
(3) whether petitioners are liable for the section 6662(a)
accuracy-related penalty for the years in issue.
Preliminary Matter
Due to petitioners' failure to comply with this Court's
standing pretrial order and hearsay objections by the parties set
forth in the stipulations, many of the exhibits offered into
evidence were not received at the trial of this case. During the
trial, petitioners' counsel offered to withdraw all objections to
respondent's exhibits if respondent would in turn withdraw all
objections to petitioners' exhibits. Thereafter, the Court
received a document from respondent in which respondent's
objections were withdrawn. We have therefore proceeded with the
disposition of this case considering all of the exhibits attached
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