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Respondent determined a deficiency in petitioner’s Federal
income tax in the amount of $25,179 for the 1994 tax year, an
addition to tax under section 6651(a) in the amount of $6,295,
and an accuracy-related penalty under section 6662(a) in the
amount of $5,036.
The issues for decision are: (1) Whether proceeds from a
sale of petitioner’s property qualify for nonrecognition
treatment under section 1041(a)(2); (2) whether petitioner is
liable for an addition to tax for failure to timely file his
return under section 6651(a); and (3) whether petitioner is
liable for an accuracy-related penalty under section 6662(a) for
the year in issue.
This case was submitted fully stipulated pursuant to Rule
122. The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time of filing the
petition, petitioner resided in Onalaska, Washington.
Petitioner and Leah Helen Olsen (Ms. Olsen) were married on
December 2, 1969. Shortly thereafter, they purchased a home
situated on 30 acres of timberland located at 235 Tryon Road,
Onalaska, Washington (Tryon Road property).
In 1993, petitioner and Ms. Olsen separated and divorced. A
Property Settlement Agreement (agreement) was executed by the
parties on November 10, 1993. Pursuant to the agreement,
petitioner received specified personal property and the Tryon
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