-55-
Thus, (1) petitioners' gain on the transaction is $953 more
than the amount determined in the notice of deficiency, but (2)
because of the 60-percent exclusion, petitioners' adjusted gross
income from the transaction is $5,619 less than the amount
determined in the notice of deficiency.
Petitioners failed to file a timely 1981 tax return. In
fact, petitioners' 1981 tax return was filed after the notices of
deficiency were issued in the instant case. In their late-filed
1981 tax return, petitioners acknowledged a tax liability of
$5,501. Our findings show that petitioners' 1981 income subject
to tax is far greater than what they reported on their 1981 tax
return.
There is no indication of offsetting deductions or credits.
We conclude, and we have found, that respondent has shown by
clear and convincing evidence that petitioners had an
underpayment of tax for 1981.
(3) 1982
In the notices of deficiency for 1982, respondent determined
that petitioners had unreported income from (1) Random Processing
Services, Inc., (2) SSI, (3) the FE Trust, and (4) Maximum
Management, and had unreported capital gain from the sale of SSC.
Pursuant to the parties' stipulation, we have found that in
1982 two checks totaling $15,000 were drawn on the Random
Processing Services' bank account to Monica. We have found that
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