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1993 17,755 4,439 3,551
All section references are to the Internal Revenue Code in
effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure. After concessions by
petitioner, the issues for decision are as follows:
1. Whether petitioner is entitled to a deduction for
business expenses. We hold that she is not.
2. Whether petitioner is liable for additions to tax for
failing to file her tax returns in a timely manner. We hold that
she is.
3. Whether petitioner is liable for accuracy-related
penalties for negligence. We hold that she is.
Background
The facts have been fully stipulated under Rule 122 and are
so found. Petitioner resided in Bensalem, Pennsylvania, at the
time she filed her petition.
Petitioner's husband, Glenn W. Phillips, was the sole
shareholder of N.H.R. Corp. (NHR). Petitioner, who had no
affiliation with NHR, owned a disability insurance policy which
in 1992 and 1993 paid her $60,000 and $90,000, respectively,
allegedly to cover the cost of NHR's overhead expenses.
On October 14, 1994, petitioner filed Federal income tax
returns for 1992 and 1993. On the returns, petitioner selected
married filing separate status and did not report the benefits
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