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1999, petitioners' EA sent to Appeals a copy of a handwritten
note as evidence of a loan of $10,000 from petitioner's father to
them in July of 1994.
On June 22, 1999, Appeals issued the notice of deficiency in
this case containing the $15,672 adjustment denying the timber
contract downpayment deduction, the unreported income adjustment
of $5,061, and the adjustment determining an accuracy-related
penalty under section 6662.
Post-Appeals
The petition was filed with the Court on September 20, 1999,
and by notice dated March 29, 2000, was set for trial at the
Court's Des Moines trial session beginning on June 19, 2000.
Petitioners retained counsel to represent them in this
matter. Counsel for the parties discussed the timber cutting
contracts and the unreported income issues for a period of weeks.
Counsel for the parties agreed that inventorying was not
appropriate treatment for petitioners' timber payments. During
their discussions, counsel for petitioners provided respondent's
counsel with documentation showing that with respect to two of
the five contracts, trees were cut and sold in 1994. Since the
income for the sale of the trees was reported in the same year as
the deduction of the downpayment, the adjustment for the two
contracts totaling $8,950 was conceded by respondent's counsel.
As part of the overall settlement, petitioners agreed that the
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