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2. Whether petitioners may deduct as a casualty loss for
1994 the cost of improving and restoring their pond and its
surrounding grounds. We hold that they may not.
3. Whether petitioners are liable for the accuracy-related
penalty under section 6662(a) for 1994. We hold that they are.
The parties agree that, to the extent that we sustain
respondent’s determinations increasing petitioners’ income shown
on Schedule C, Profit or Loss From Business, a computational
adjustment is required for petitioners’ self-employment tax for
1994.
Unless otherwise indicated, section references are to the
Internal Revenue Code. References to petitioner are to Marvin L.
Barmes. References to Mrs. Barmes are to petitioner Barbara J.
Barmes.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
A. Petitioners
Petitioners lived in Fritchton, Indiana (the Fritchton
residence), when they filed their petition. The Fritchton
residence is located on 17.73 acres of land (the Fritchton
property). Petitioners acquired the Fritchton residence and
property in 1978.
There is an old farmhouse located near petitioners’
residence on the Fritchton property. Mrs. Barmes’ mother lived
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