Daniel F. Nix and Gayle H. Nix - Page 9




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          petitioners, if any.  Telim’s books and records were not                    
          produced.  The amount of petitioners’ losses with regard to their           
          investment in Telim is not established.                                     
               Petitioners’ claim--that all funds they invested in Telim              
          should be treated as capital losses for 1990 relating to non-               
          section 1244 stock--is inconsistent with petitioners’ settlement            
          of their case in this Court involving 1989, pursuant to which               
          petitioners’ Telim stock was given section 1244 stock treatment.            
          Petitioners’ attempt to recast funds they invested in Telim as              
          representing either loans or as nonsection 1244 stock appears to            
          be nothing more than a belated attempt to manufacture capital               
          losses to offset capital gain income petitioners admit they                 
          failed to report on their 1991 joint Federal income tax return.             
               Under section 6662(a), a 20-percent accuracy-related penalty           
          applies to underpayments of tax attributable to negligence.                 
               Petitioners argue that unforeseen delays in construction of            
          their new residence caused them to miss the 2-year tax free roll-           
          over period relating to gain on sale of their California                    
          residence and that they relied on their tax return preparer in              
          deducting moving expenses paid by their employer.                           
               The credible evidence does not support petitioners’                    
          argument.  We sustain respondent’s determination of the accuracy-           
          related penalty.                                                            







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