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accuracy-related penalty under section 6662(a)(1)1 and (d)(1)
for substantial understatement of tax.
Following concessions,2 we must decide the following issues:
1. Whether $69,500 that James E. Hendricks (petitioner)
withdrew from his individual retirement account (IRA) is taxable
to petitioners in 1996. We hold that it is.
2. Whether petitioners are liable for the accuracy-related
penalty under section 6662(a) and (d) for substantial
understatement of tax. We hold that they are.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
A. Petitioners
Petitioners are married and lived in Laurinburg, North
Carolina, when they filed the petition in this case.
B. Bechtel Trust & Thrift Plan
Petitioner worked for Bechtel Corp. (Bechtel) from 1977 to
1988, when he resigned, and from 1992 until 1995, when he
retired. He became a participant in the Bechtel Trust & Thrift
1 Unless otherwise stated, section references are to the
Internal Revenue Code in effect in 1996, and Rule references are
to the Tax Court Rules of Practice and Procedure.
Sec. 6662(a)(1) did not exist in 1996. We assume that
respondent meant to cite sec. 6662(a).
2 Petitioners concede that their 1996 income should be
increased by $500 for unemployment compensation and by $11 for
interest income.
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