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Penalty
Year Deficiency Sec. 6662(a)
1993 $12,720.79 $2,544.16
1994 8,307.00 1,661.40
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 the parties, the remaining issues for
decision are whether petitioner is liable for self-employment
tax, entitled to deduct expenses relating to his patents, and
liable for accuracy-related penalties.
FINDINGS OF FACT
Petitioner resided in Edison, New Jersey, at the time his
petition was filed. From 1948 until his retirement in 1989,
petitioner operated a retail store that sold electronic goods and
collectibles (i.e., comic books, baseball cards, and stamps).
While operating his retail business, petitioner, in his spare
time, created and patented inventions. His inventions ranged
from microwave power sources to methods for preparing beverages.
In 1981, petitioner was issued a patent for a microwave cookware
container.
In 1989, petitioner filed a civil suit against Northland
Aluminum Products, Inc. (d/b/a Nordic), and Regal Ware, Inc.
(Regal), for infringing upon petitioner's 1981 patent. That same
year, petitioner and Nordic entered into a settlement agreement
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