Dorchester Industries Incorporated, et al. - Page 3

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                Wheaton is an innocent spouse within the meaning of section                                                                   
                6013(e).  On that basis, respondent has conceded all deficiencies                                                             
                in income tax, additions to tax, and penalties determined with                                                                
                respect to Mary Wheaton.  We accept respondent’s concession and                                                               
                shall enter decisions accordingly.                                                                                            
                         Respondent asks that we enter decisions with respect to                                                              
                petitioners Dorchester Industries Inc. (Dorchester) and Frank                                                                 
                Wheaton, Jr. (Frank Wheaton), based on a settlement agreement                                                                 
                that respondent claims those petitioners entered into on November                                                             
                6, 1995.  We must determine whether Dorchester and Frank Wheaton                                                              
                did, in fact, enter into such an agreement and, if so, the                                                                    
                consequence thereof.  Respondent asks that we enter decisions                                                                 
                with respect to Dorchester and Frank Wheaton as follows:                                                                      
                Docket No. 20515-93 (Dorchester Industries)                                                                                   
                          Additions to Tax                                                                                                    
                                                          Sec.                     Sec.      Sec.                                             
                         Year    Deficiency   6653(b)(1)                           6653(b)(2)     6661                                        
                         1981     $92,643                 $46,322                  None                     None                              
                         1982            89,411           44,706                           1                None                              
                         1985     230,360                 115,180                          1        $57,590                                   
                         1 The addition to tax under I.R.C. sec. 6653(b)(2) is                                                                
                50 percent of the interest payable under I.R.C. sec. 6601 with                                                                
                respect to the portion of the underpayment which is attributable                                                              
                to fraud, which is the entire deficiency for each of the taxable                                                              
                years 1982 and 1985.                                                                                                          
                      Additions to Tax                                                                                                        
                                                          Sec.        Sec.                                                                    
                Year      Deficiency      6653(b)(1)(A)  6653(b)(1)(B)                                                                        
                1986                     $1,376                   $1,032                            1                                         
                         1 The addition to tax under I.R.C. sec. 6653(b)(1)(B) is                                                             
                50 percent of the interest payable under I.R.C. sec. 6601 with                                                                
                respect to the portion of the underpayment which is attributable                                                              




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