Arnold S. and Ellen K. Jacobs - Page 2

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            issue, unless otherwise indicated.  All Rule references are to                            
            the Tax Court Rules of Practice and Procedure.  The Court agrees                          
            with and adopts the opinion of the Special Trial Judge, which is                          
            set forth below.                                                                          
                              OPINION OF THE SPECIAL TRIAL JUDGE                                      
                  WOLFE, Special Trial Judge:  Respondent determined a                                
            deficiency in petitioners' 1981 joint Federal income tax in the                           
            amount of $27,751, plus additions to tax for that year in the                             
            amount of $8,325.30 under section 6659 for valuation                                      
            overstatement, in the amount of $1,387.55 under section                                   
            6653(a)(1) for negligence, and under section 6653(a)(2) in an                             
            amount equal to 50 percent of the interest due on the                                     
            underpayment attributable to negligence.1  Respondent also                                
            determined that interest on the deficiency accruing after                                 
            December 31, 1984, would be calculated at 120 percent of the                              
            statutory rate under section 6621(c).                                                     
                  In a Stipulation of Settled Issues, the parties agreed to a                         
            reduced deficiency in the amount of $26,749, plus reduced                                 
            additions to tax in the amount of $6,475 under section 6659 for                           
            valuation overstatement and in the amount of $1,337 under section                         
            6653(a)(1) for negligence.  The parties also agreed that the                              
            underpayment of $26,749 is a substantial underpayment                                     


            1     In the notice of deficiency, respondent refers to sec.                              
            6653(a)(1)(A) and (B).  For 1981, the additions to tax for                                
            negligence were provided under sec. 6653(a)(1) and (2).                                   




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