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Practice and Procedure. The Court agrees with and adopts the
opinion of the Special Trial Judge, which is set forth below.
OPINION OF THE SPECIAL TRIAL JUDGE
DINAN, Special Trial Judge: This matter is before the Court
on respondent’s Motion to Dismiss for Failure to State a Claim
and to Impose a Penalty under I.R.C. Section 6673, filed
November 2, 2000. A hearing was held on the motion. As
explained below, we shall grant respondent’s motion.
Respondent determined a deficiency of $555,943 in
petitioners’ Federal income tax for the year 1996 and a penalty
of $111,188.60 pursuant to section 6662(h).
Background
The deficiency in issue is based on respondent’s
determinations as follows: (a) Petitioners received and failed
to include in income on their 1996 return, $2,722 of capital
gains; (b) petitioners are not entitled to a $3,000 capital loss
deduction for 1996; (c) $48 of dividend income, which had been
reported in income by a trust created by petitioners, was taxable
to petitioners in 1996; (d) petitioners are not entitled to
$15,300 of exemption deductions for 1996 because of increases to
petitioners’ income (a computational adjustment); (e) $53 of
interest income which had been reported in income by a trust
created by petitioners was taxable income to petitioners in 1996;
(f) petitioners were not entitled to a $137,002 net operating
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