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Held: Ps are not entitled to a casualty loss deduction
for fluctuation in the market value of their property and
are liable for the deficiency determined by R.
Held, further, Ps are not liable for the sec.
6662(a), I.R.C., accuracy-related penalty on the
grounds that the deduction claimed was taken with
reasonable cause and in good faith.
Bruce I. Hochman, Dennis L. Perez, and Stuart A. Simon, for
petitioners.
Michele F. Leichtman and Jason M. Silver, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
NIMS, Judge: Respondent determined a Federal income tax
deficiency for petitioners’ 1994 taxable year in the amount of
$291,931. Respondent also determined an accuracy-related penalty
of $58,386 for 1994, pursuant to section 6662(a).
The issues for decision are as follows:
(1) Whether petitioners are entitled to deduct a net
casualty loss of $751,427 for the taxable year 1994; and
(2) whether petitioners are liable for the section 6662(a)
accuracy-related penalty on account of negligence.
Unless otherwise indicated, all section references are to
sections of the Internal Revenue Code (Code) in effect for the
year in issue, and all Rule references are to the Tax Court Rules
of Practice and Procedure.
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