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The amounts of the deficiencies and accuracy-related
penalties that were determined by respondent in the two notices
of deficiency are as follows:
Accuracy-related penalty
Year Deficiency Sec. 6662(a)
1993 $3,806 $761.20
1994 3,285 657.00
1995 4,470 894.00
The adjustments to income that gave rise to the deficiencies
that were determined by respondent in the two notices of
deficiency were as follows:
Adjustment 1993 1994 1995
"1120S flow thru1" $23,474 $18,300 ---
Itemized deductions 1,234 --- ---
Earned income credit --- 540 $2,081
Unreported income1 --- --- 19,242
1 The adjustments for "1120S flow thru" and "unreported
income" relate to an indirect method of reconstructing
income and are attributable principally to personal
living expenses.
Respondent issued two separate notices of deficiency because
petitioners had previously filed a power of attorney with
respondent naming an accountant, Harold Marley (Mr. Marley), as
their attorney-in-fact for the taxable years 1993 and 1994. In
addition to issuing the notice of deficiency for 1993 and 1994 to
petitioners, respondent mailed a copy of the notice to Mr.
Marley. On the other hand, because petitioners did not file a
power of attorney with respondent in respect of the taxable year
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Last modified: May 25, 2011