-2-
Additions to Tax
Sec. Sec. Sec. Sec. Sec. Sec. Sec.
Year Deficiency 6653(a)(1) 6653(a)(1)(A) 6653(a)(1)(B) 6653(b)(1) 6653(b)(1)(A) 6653(b)(1)(B) 6661
1986 $13,549 --- $428 1 --- $ 3,740 2 $3,387
1987 27,024 --- 88 1 --- 18,941 2 6,756
1988 19,611 $73 --- --- $13,617 --- --- 4,903
1 50 percent of the interest due on the portion of the underpayment attributable to negligence under sec.
6653(a)(1)(B).
2 50 percent of the interest due on the portion of the underpayment attributable to fraud under sec.
6653(b)(1)(B).
The deficiencies in this case arise primarily from
respondent's determination that petitioners omitted income from two
separate and distinct sources: (1) From Mr. Marzullo's salary at
the College of Notre Dame (sometimes referred to as the College),
and (2) from income generated by MPM Productions, an unincorporated
business, and MPM Productions, Inc., a subchapter S corporation
owned jointly by petitioners (both businesses referred to as MPM).1
Respondent determined that both petitioners were aware of the two
sources of omitted income, and that both petitioners intentionally
omitted the two sources of income to defraud the Government. Thus,
respondent determined the fraud penalty against both Mr. and Mrs.
Marzullo for the omission of income from both sources.
Petitioners concede the deficiency, except for the amount
attributable to self-employment tax relating to the income of MPM
subsequent to August 31, 1987. Petitioners further concede that
Mr. Marzullo is liable for the fraud additions to tax for 1987 and
1988 and the negligence additions to tax with respect to the
1 In addition to the omitted income, respondent
disallowed a substantial portion of claimed itemized deductions
for each of the years under consideration.
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