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related penalty under section 6662(a) for substantial
understatement of income tax. Respondent reflected these
determinations in a notice of deficiency issued to petitioner on
December 18, 1995.
Following respondent's concession of the addition to tax
under section 6654(a), we must determine the following issues:
1. Whether petitioner's gross income includes his personal
service income paid to a trust entitled Ideal Management.2 We
hold it does.
2. Whether petitioner is liable for the accuracy-related
penalty determined by respondent. We hold he is.
3. Whether petitioner is liable for a penalty under section
6673(a)(1). We hold he is liable for a penalty of $5,000.
Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the year in issue. Rule
references are to the Tax Court Rules of Practice and Procedure.
Dollar amounts are rounded to the nearest dollar.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulated facts and exhibits submitted therewith are
incorporated herein by this reference. Petitioner resided in
San Diego, California, when he petitioned the Court. He filed a
2 Although we use the word "trust" to refer to Ideal
Management, we do not mean to suggest that Ideal Management is a
trust for Federal income tax purposes. As discussed below, we
conclude it is not. We use the word "trust" merely for
convenience.
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