- 11 - respectively. Respondent accepts the foregoing changes reported on the Forms 1040X except for the net operating loss deductions. Based on the Forms 1040X, we find that petitioners underreported their Schedule C net income from Monterey by $80,214 and $54,778, for 1987 and 1988, respectively, and failed to report a capital gain of $27,944 for 1988. Based on respondent’s acceptance of the decreases in interest income shown on the Forms 1040X, we find that petitioners over reported their interest income in such amounts. Petitioners have failed to prove their entitlement to the net operating loss deductions claimed on the Forms 1040X, and we allow no deductions therefor. II. Additions to Tax for Fraud A. Introduction Respondent has determined additions to tax for fraud against Joseph for both 1987 and 1988. For 1987, section 6653(b)(1)(A) imposes an addition to tax equal to 75 percent of any underpayment in tax if any part of the underpayment is due to fraud; section 6653(b)(1)(B) imposes a separate addition to tax, equal to 50 percent of the interest payable under section 6601, determined on the portion of the underpayment attributable to fraud. For 1988, section 6653(b)(1) imposes an addition to tax equal to 75 percent of any underpayment in tax if any part of the underpayment is due to fraud; the time-sensitive interest addition previously found in section 6653(b)(1)(B) is eliminated.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011