Frank R. Courbois - Page 17

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                      In summary, petitioner has not shown that he engaged                               
                in his activity with respect to the Cloudia with an actual                               
                and honest objective of making a profit.  Accordingly, we                                
                find on the basis of all of the facts and circumstances of                               
                this case that petitioner's activity with respect to the                                 
                Cloudia is an activity not engaged in for profit and is                                  
                subject to the limitation on deductions imposed by section                               
                183.                                                                                     
                      We note that the notice of deficiency refers to the                                
                application of section 183 as respondent's "alternative                                  
                position".  The notice of deficiency also suggests that                                  
                the adjustment with respect to the Cloudia would be                                      
                computed differently under section 183 than the adjustment                               
                determined in the notice.  For this reason, the Court will                               
                enter decision in this case under Rule 155.                                              

                Accuracy-Related Penalty                                                                 
                      Respondent determined that petitioner’s underpayment                               
                of income tax for 1990 was due to negligence or disregard                                
                of rules or regulations, and that he is liable for the                                   
                accuracy-related penalty under section 6662(a).  Petitioner                              
                bears the burden of proving that respondent's determination                              
                is wrong.  Rule 142(a).                                                                  
                      Section 6662(a) imposes an accuracy-related penalty                                
                equal to 20 percent of the portion of the underpayment                                   




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