Shirley Dean Emmons and Charles W. Emmons - Page 7

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          therefor.  Accordingly, we find petitioners liable for the                  
          addition to tax under section 6651(a)(1).                                   
               Respondent also determined that petitioners are liable for             
          the accuracy-related penalty for substantial understatement of              
          tax under section 6662(b)(2).  In this regard, petitioners have             
          not provided substantial authority for the positions taken on               
          their return.  In fact, Mrs. Emmons testified that the accountant           
          who prepared the return informed her that the foreclosure                   
          transactions resulted in taxable gain to petitioners and that she           
          nonetheless insisted that the return be prepared showing losses             
          on these transactions.  Furthermore, petitioners did not make               
          disclosures within the meaning of section 6662(d)(2)(B)(ii).                
          Therefore, due to the concessions made by the parties and the               
          findings herein, the penalty will be sustained in the event the             
          Rule 155 computation indicates that petitioners' understatement             
          of tax exceeds the greater of $5,000 or 10 percent of the amount            
          of tax required to be shown on the return.                                  
               To reflect the foregoing and concessions,                              
                                                Decision will be entered              
                                           under Rule 155.                            

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Last modified: May 25, 2011