- 3 -
Petitioners concede the adjustments made by respondent for
unreported gross income, the allowance of the two-earner
deduction, and the increase to capital gains. Petitioners also
concede that Mr. Streck is liable for the additions to tax under
section 6653(b)(1)6 and (2) for the taxable years 1983, 1984, and
1985, and agree with respondent that the addition to tax under
section 6653(b)(2) is applicable only to the tax attributable to
unreported income. Respondent concedes that Mrs. Streck is not
liable for the additions to tax under section 6653(b)(1) and (2)
for any of the years at issue.
The issues remaining for decision are: (1) Whether
respondent is bound by an alleged settlement agreement for the
years at issue; (2) whether petitioners are entitled to
deductions for losses they claimed were sustained by Double D
Ranch, Inc., an S corporation; (3)whether Mrs. Streck is entitled
to innocent spouse relief pursuant to section 6013(e); (4)
whether petitioners are liable for the addition to tax pursuant
5(...continued)
the following items: Business expenses in the amount of $42,500
for 1984; legal and professional fees in the amount of $16,014
for 1984; losses related to petitioners' ownership of Double D
Ranch, Inc., an S corporation, in the amounts of $200,331,
$255,302, and $229,232 for 1984, 1985, and 1986, respectively;
and real estate taxes in the amount of $22,994 for 1985.
Respondent allowed an increase in expenses related to legal and
professional fees in the amount of $2,848 in 1985.
6Unless 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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