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Addition to tax Penalty
Year Deficiency Sec. 6651(a)(1)1 Sec. 6662
1989 $75,389 $3,769.45 $15,077.80
Following concessions by the parties,2 the issues for
decision are whether: (1) Petitioner is entitled to a farm loss
deduction of $110,000 for farm rents purportedly paid; (2)
petitioner had unreported income from one of his S corporations,
Cheyenne River Corp., Inc. (Cheyenne), by reason of its
constructive receipt of Federal disaster and crop insurance
payments to its creditors; (3) petitioner is entitled to a
Schedule E loss from Cheyenne that was not reported on Cheyenne’s
Form 1120S; and (4) petitioner is liable for a section 6651(a)(1)
addition to tax for failing to timely file his 1989 Federal
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable year in
issue. All Rule references are to the Tax Court Rules of
Practice and Procedure. Except for respondent’s determinations
shown above, dollar amounts have been rounded to the nearest
dollar.
2 Petitioner conceded the claim asserted in his petition
that a substantial amount of the payment he received in a
contract settlement with his former employer, see infra note 5,
should be excluded from gross income under sec. 104(a)(2).
Respondent conceded that petitioner was entitled to a net
operating loss deduction of $53,979 claimed in his return,
representing a carryover from a prior year, that had been
disallowed by the statutory notice of deficiency. Petitioner
raised at trial and on brief a further claim of entitlement to an
unused investment tax credit carryover from 1987; the Court did
not consider this claim, as not having been properly pleaded, as
having been raised too late, and as lacking foundation in the
record.
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Last modified: May 25, 2011