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Addition to Tax Accuracy-related Penalties
Year Deficiency Sec. 6651(a)(1) Sec. 6662(h) Sec. 6662(a)
1989 $381,230 -- $89,600 $31,446
1990 113,333 1$30,784 -- 22,667
1991 53,347 -- -- 10,478
1Respondent has conceded the addition to tax under sec.
6651(a)(1) in the amount of $30,784, and petitioners have
conceded the addition to tax of $2,005.11 assessed per return
under sec. 6651(a)(1).
After concessions, the issues remaining for decision are:
(1) Whether petitioners are entitled to any basis in a collection
of "muscle cars"1 they sold in 1989; (2) whether petitioners were
engaged in a trade or business that would entitle them to a
business expense deduction regarding certain disallowed corporate
expenses; (3) whether petitioners underreported ordinary income
from Blumenstock Enterprises, Ltd., an S corporation; (4) whether
petitioner Dorothy G. Garrett is entitled to innocent spouse
relief pursuant to section 6013(e);2 (5) whether petitioners are
liable for accuracy-related penalties under section 6662(a) for
1989, 1990, and 1991 and under section 6662(h) for 1989.
1On brief, petitioners describe muscle cars as "factory hot
rods * * * [with] high-performance, high-horsepower engines
* * * with [a] four-speed manual transmission." Most muscle cars
in petitioners' 1989 collection were manufactured in the 1960's
to early 1970's, and include, for example, a 1970 Ford Mustang
Boss 429, a 1970 Plymouth Super Bird, a 1966 Corvette, and a 1967
Ford Fairlane.
2Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable years in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure
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