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1989 -- -- -- -- $11,746
1 Fifty percent of the statutory interest on $18,234, computed from Apr. 15, 1988, to
the earlier of the date of assessment or the date of payment.
All section references are to the Internal Revenue Code in effect
for the years in issue.
The issues for decision are as follows:
1. Whether petitioners failed to report capital gain and
rental income and overstated depreciation expenses and charitable
contributions. We hold that they did.
2. Whether petitioners are liable for section 6653
additions to tax, and a section 6663 penalty, for fraud. We hold
that they are.
FINDINGS OF FACT
Petitioners, husband and wife, resided in Kalamazoo,
Michigan, at the time their petition was filed. During the years
in issue, Mr. Shah worked as a scientist, and Mrs. Shah as a
research biochemist, for The Upjohn Company (Upjohn). Upjohn
provided petitioners with medical insurance and reimbursed
petitioners' employee business expenses.
Petitioners were involved in real estate activities. They
jointly owned and managed two rental properties. Petitioners
also owned a vacant lot, which they purchased in 1984 for
$16,000. Petitioners, in 1986, sold the lot on an installment
basis for $26,000 and, in 1987, received a $17,693 payment.
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