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and 1992 taxable years. Respondent determined the following
income tax deficiencies and penalties for those years:
Penalty
Sec.
Year Deficiency 6662(a)
1991 $25,105 $5,021
1992 9,917 1,983
We must decide whether section 166 allows petitioner to
deduct the $50,000, $47,350, $31,000, $12,000, and $5,000 amounts
discussed below as worthless business debts. We hold it does
not. We also decide whether petitioner is liable for the
penalties determined by respondent under section 6662(a) for
substantial understatement of income tax. We hold he is not.
Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the years 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
Kansas City, Missouri, when he petitioned the Court. He filed
for each of the years 1991 and 1992 a Form 1040, U.S. Individual
Income Tax Return, using the filing status of "Single". These
returns were prepared by petitioner's counsel, John H. Trader.
Petitioner relied on Mr. Trader to prepare his returns correctly.
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