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The third issue for decision is whether petitioners received
but did not report dividend income. Respondent determined that
petitioners failed to report $772 in dividend income from Charles
Schwab.2
Gross income generally includes income from whatever source
derived, including dividends. See sec. 61(a)(7); sec. 301(c)(1).
Petitioners do not deny receiving the $772 of dividend income
from Charles Schwab. Rather, Mr. Kuo testified that the dividend
income was reported on the Schedule C as gross receipts (the
remainder of the reported $1,720 in gross receipts was
purportedly a mistake and not income). We find this testimony to
be incredible; we do not believe that petitioners reported
dividend income as the sole income from their computer-related
business, and that in the process they somehow mistakenly entered
$1,720 instead of $772. We uphold respondent’s determination
that petitioners received $772 in unreported income.
The final issue for decision is whether petitioners are
liable for an accuracy-related penalty under section 6662(a).
Respondent determined that petitioners are liable for an
accuracy-related penalty imposed by section 6662(a) for the
portion of the underpayment of tax for 1996 attributable to
2Respondent concedes the following amounts reflected in the
notice of deficiency as unreported income: $221 of dividends and
$3 of interest from Herzog Geduld, and $200 of dividends and $1
of interest from E Trade Securities. Petitioners concede
receiving unreported interest income of $33 from Summit Bank.
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