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Gary L. Pierce and Mary C. Pierce
Penalty
Year Deficiency Sec. 6662(a)1
1984 $3,513 $703
1986 71,974 14,395
1987 539,914 1105,833
1988 527,851 105,570
1989 102,323 20,465
1 For taxable year 1987, the penalty pursuant to sec.
6662(a) is shown in the statutory notice as both $151,729 and
$105,833. The correct amount is $105,833.
Gary L. Pierce
Penalty
Year Deficiency Sec. 6662(a)
1991 $444,040 $88,808
By reason of respondent’s concessions, the remaining issues
for decision are: (1) Whether Mary Catherine Development Co.
(Mary Catherine), an S corporation engaged in buying and
developing land for sale to residential builders, was entitled to
use the lower of cost or market (LCM) method, an inventory method
of accounting, for taxable years 1989 and 1990 to claim
reductions of income for decreases in the fair market value of
parcels of land held for development; and (2) whether Gary L.
Pierce (petitioner) and Mary C. Pierce are liable for accuracy-
related penalties for the years 1984, 1986 through 1989, and 1991
pursuant to section 6662(a) for negligence or intentional
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable years in
issue. All Rule references are to the Tax Court Rules of
Practice and Procedure. Dollar amounts have been rounded to the
nearest dollar.
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