Michael E. and Nancy Hentges - Page 2

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               Respondent determined a deficiency of $8,116 in Federal                
          income tax and an accuracy-related penalty under section 6662(a)            
          in the amount of $1,623 for petitioners' 1992 tax year.                     
               After a concession by petitioners, the issues for decision             
          are whether petitioners properly substantiated certain trade or             
          business expenses under section 274(d), and whether petitioners             
          are liable for the penalty under section 6662(a) for a                      
          substantial understatement of tax under section 6662(b)(2).2                
               Some of the facts were stipulated.  Those facts, with the              
          annexed exhibits, are so found and are incorporated herein by               
          reference.  At the time the petition was filed, petitioners were            
          legal residents of Tulsa, Oklahoma.                                         
               During the year in question, Michael E. Hentges (petitioner)           
          was primarily engaged in the sale of insurance and securities               
          and, to some extent, engaged in estate planning and financial               
          consultation.  He has been in such business since 1984.  Many of            
          his clients were located in various States.  Petitioner made                
          frequent business trips to contact and solicit new clients, and             
          virtually all of his travel was by private plane, which he                  
          rented.  For local transportation, petitioner owned a 1983                  
          Mercedes automobile that he used exclusively in his business.               

               2    At trial, petitioners conceded an adjustment in the               
          notice of deficiency for their failure to report as income on               
          their 1992 return an IRA distribution of $6,220.  Petitioners               
          also conceded the 10-percent additional tax under sec. 72(t) for            
          the early distribution of the IRA.                                          




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