- 2 -
Penalty
Year Deficiency Sec. 6662(a) and (d)
1991 $4,024 - 0 -
1992 14,645 $2,929
1993 8,013 1,603
All references to petitioner are to Timothy L. Williams.
All numbers are rounded to the nearest dollar. After
concessions,2 the issue for decision is whether petitioners are
entitled to deduct losses attributable to certain S corporations
in excess of the amounts allowed by respondent. Disposition of
this issue turns on the amount of petitioner’s basis in his stock
2 The deficiencies and penalties reflect, in part,
adjustments for unreported income. At trial and on brief
petitioners specifically contested only the adjustments relating
to disallowance of S corporation losses. All uncontested
adjustments and liability for accuracy-related penalties with
respect to any substantial understatements of tax are deemed to
be conceded. Rule 149(b); Murphy v. Commissioner, 103 T.C. 111,
119 (1994); Rothstein v. Commissioner, 90 T.C. 488, 497 (1988).
Petitioners in their petition raised an issue relating to
their tax liability for a year not covered by the notice of
deficiency. They alleged that, owing to a return preparer’s
error, a net loss incurred for 1989 by petitioner’s wholly owned
S corporation was not claimed on petitioners’ tax return for that
year. Petitioners subsequently filed a claim for refund of
$12,988, which the Internal Revenue Service denied by letter
dated April 22, 1993. With respect to this issue, we can only
observe that the jurisdiction of this Court to redetermine
petitioners’ correct tax liability is limited to the years
covered by the notice of deficiency, 1991 through 1993. Sec.
6214(b). Petitioners did not claim an NOL carryover from 1989 on
their returns for any of the years in issue, and they have not
shown that they would be entitled to carry forward any NOL that
may have arisen in 1989 without first carrying it back to the
preceding 3 years. Sec. 172(b)(2) and (3). Consequently, the
alleged overpayment of tax for 1989 has no relevance to the
issues that are properly before us. Cf. Lone Manor Farms, Inc.
v. Commissioner, 61 T.C. 436, 440-442 (1974), affd. without
published opinion 510 F.2d 970 (3d Cir. 1975).
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