Mark and Helen Thomson - Page 2




                                        - 2 -                                         

             Year          Deficiency          Accuracy-Related Penalty               
             1993            $51,860                    $4,720                        
             1994            122,417                    10,647                        

               The issues remaining for decision are:                                 
               (1)  Are petitioners required to utilize a 3-year recovery             
          period as contended by petitioners or a 5-year recovery period as           
          contended by respondent in calculating depreciation deductions              
          for the years at issue for certain aircraft parts purchased                 
          during those years?  We hold that they are required to use a 5-             
          year recovery period.                                                       
               (2)  Are petitioners liable for the accuracy-related penalty           
          under section 6662(a) for each of the years at issue?  We hold              
          that they are.                                                              
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.  In           
          addition, on December 1, 1998, respondent filed a request for               
          admissions with the Court, a copy of which the Court served on              
          petitioners on December 4, 1998.  On December 4, 1998, the Court            
          ordered petitioners to file a response to that request on or                
          before January 4, 1999.  Petitioners did not file any response to           
          respondent’s request for admissions.  As a result, each matter              
          set forth in respondent's request for admissions is deemed                  
          admitted.  See Rule 90(c); Marshall v. Commissioner, 85 T.C. 267,           
          272 (1985).                                                                 
               Petitioners resided in Adelanto, California, at the time               





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