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1551 as to 1989 (docket No. 3832-95). Respondent filed an
unagreed computation for the 1989 taxable year that would result
in a $1,032,409 income tax deficiency and a $392,873.13
overpayment after considering payments made after issuance of the
notice of deficiency. Respondent's computation for 1989 would
also result in a $774,307 fraud penalty under section 6663. This
opinion addresses the parties' controversy over the computation
of the decision(s) to be entered.
Respondent had determined deficiencies in petitioners' 1989
and 1990 Federal income tax in the amounts of $1,111,292 and
$1,111,320, respectively, and section 6663(a) civil fraud
penalties for 1989 and 1990 of $833,469 and $833,490,
respectively. Respondent determined the income tax deficiency
and penalty in the alternative for 1989 or 1990.
The issues we considered were: (1) Whether petitioners may
defer recognition of gain from the disposition of certain real
property under section 1031, (2) if the transaction does not
qualify for section 1031 exchange, whether petitioners are
entitled to report the gain in 1990 under the installment sale
method, and (3) whether petitioners are liable for a fraud
penalty under section 6663.
1 Unless otherwise indicated, Rule references are to the
Tax Court Rules of Practice and Procedure, and section references
are to the Internal Revenue Code for the years in issue.
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