Thomas M. and Christine A. Fries - Page 2

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               Thomas M. Fries and Christine A. Fries, pro sese.                      
               Amy A. Campbell, for respondent.                                       


                       MEMORANDUM FINDINGS OF FACT AND OPINION                        
               NIMS, Judge:  Respondent determined a deficiency in                    
          petitioners' Federal income tax for the tax year ended December             
          31, 1989, in the amount of $19,728.  Respondent also determined             
          that petitioners are liable for an accuracy-related penalty of              
          $3,946 pursuant to section 6662(a) for 1989.  (Petitioner                   
          Christine A. Fries is a party to this proceeding solely because             
          she filed a joint return with her husband, and the term                     
          petitioner will be used henceforth to refer to Thomas M. Fries.)            
               All section references are to sections of the Internal                 
          Revenue Code in effect for the year in issue.  All Rule                     
          references are to the Tax Court Rules of Practice and Procedure.            
               The issues for decision are as follows:                                
               (1)  Whether petitioners are entitled to a claimed bad debt            
          deduction of $75,000 for 1989.  We hold that they are not.                  
               (2)  Whether petitioners are liable for the accuracy-related           
          penalty under section 6662(a) for a substantial understatement of           
          tax.  We hold that they are.                                                
               Some of the facts have been stipulated and are found                   
          accordingly.  The stipulation of facts and attached exhibits are            
          incorporated herein by this reference.  Petitioners resided in              
          Dunwoody, Georgia, when they filed their petition.                          




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