Maurice D. and Elinor Taylor - Page 3

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               After concessions,1 the following issues remain for decision:          
          (1) Whether Maurice D. Taylor (petitioner) received $280,698 (or            
          any lesser amount) of income from a check-kiting scheme in 1988;2           
          (2) whether petitioner is liable for the fraud addition to tax              
          pursuant to section 6653(b)(1) for 1988 and fraud penalties                 
          pursuant to section 6663 for 1989 and 1990; (3) whether Elinor              
          Taylor (Mrs. Taylor) is entitled to innocent spouse relief pursuant         
          to section 6013(e) for each year in issue; and (4) in the event the         
          Court does not sustain respondent's determinations of the fraud             
          addition to tax or penalties, whether petitioners are liable for            
          additions to tax or accuracy-related penalties for negligence,              
          substantial understatement, and failure to file.                            
               All section references are to the Internal Revenue Code as in          
          effect for the years in issue, unless otherwise indicated.  All             

               1    The parties stipulate that petitioners had net income             
          from the grocery/convenience store business of $72,919 in 1988,             
          $102,370 in 1989, and $87,877 in 1990.  Respondent concedes that            
          petitioners had no net income from the jewelry business and that            
          Mrs. Taylor is not liable for the fraud additions to tax and                
          penalties.  Petitioners concede respondent's determinations with            
          respect to the individual retirement account distribution,                  
          interest income, and gambling winnings.  Petitioners further                
          concede that the net income from the grocery/convenience store              
          business is subject to self-employment taxes for each year in               
          issue.  Finally, petitioners concede that they are liable for the           
          additions to tax for failure to timely file their 1989 and 1990             
          Federal income tax returns pursuant to sec. 6651(a)(1).                     
               2    In the notice of deficiency, respondent determined                
          unreported income of $300,698 from a check-kiting scheme in 1988.           
          At trial, respondent conceded that $20,000 of the $300,698                  
          related to attorney's fees and thus reduced the amount of                   
          unreported income from the check-kiting scheme to $280,698.                 

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