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Held, further, Ps are liable for the sec. 6662(a),
I.R.C., accuracy-related penalty on grounds of a
substantial understatement of income tax.
Gregory W. Wagner, for petitioners.
Michael J. Calabrese and Mark J. Miller, for respondent.
OPINION
NIMS, Judge: Respondent determined a Federal income tax
deficiency for petitioners’ 1996 taxable year in the amount of
$46,993. Respondent further determined an accuracy-related
penalty of $9,399, pursuant to section 6662(a). The issues for
decision are:
(1) Whether petitioners are required to recognize income in
1996 from cancellation of indebtedness;
(2) whether petitioners must report as income amounts
received in the form of Social Security benefits; and
(3) whether petitioners are liable for the section 6662(a)
accuracy-related penalty on account of a substantial
understatement of income tax.
Unless otherwise indicated, all section references are to
sections of the Internal Revenue Code in effect for the year at
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
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