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requested, we believe that respondent’s concession eliminates any
deficiencies or section 6662(a) penalties with respect to the
trusts. We impose no penalties under section 6673(a)(1) against
the trusts. (We have imposed substantial penalties under that
section against the J. and C. Shirleys, which should serve as
a deterrent to them again trying to avoid tax as they have done
here.)
Remaining Issues
The remaining issues concern the J. and C. Shirleys. Those
issues are as follows:
Whether the J. Shirleys understated their gross income for
1995 by omitting (1) $179,791 of gross receipts reported by
Alexion Trust and (2) $4 of interest and $42,000 of gross income
reported by Caralan Trust.
Whether, for 1995, the J. Shirleys are entitled to deduct
$19,896 of depreciation apportioned to them by Caralan Trust.
Whether the J. Shirleys are liable for self-employment tax
for 1995 allocable to Joseph Shirley (and are entitled to a
related deduction) on account of the omitted gross receipts of
$179,791.3
3 The amount of petitioners’ liability for self-employment
tax and the amount of the deduction under sec. 164(f) to which
petitioners are entitled are computational matters, the
resolution of which will depend upon our disposition of the other
issues. The J. Shirleys have not separately challenged such
liability and deduction, and we shall not further discuss those
(continued...)
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