Nicholas P. Ruggiero and Annette M. Ruggiero - Page 6




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          the result in the Utah Jojoba I Research case at docket No. 7619-           
          90.  The Court issued an opinion in Utah Jojoba I Research v.               
          Commissioner, T.C. Memo. 1998-6, on January 5, 1998, holding that           
          the partnership was not entitled to research and experimental               
          expense deductions.  The Court found that the partnership was not           
          directly or indirectly engaged in research or experimentation,              
          was not engaged in a trade or business, and lacked a realistic              
          prospect of entering a trade or business.  On June 4, 1999, the             
          Court entered a decision in the Arid Land case that upheld                  
          respondent's diallowance of the partnership losses reported by              
          Arid Land in 1983 and 1984.                                                 
               On July 3, 2000, respondent sent to petitioners the                    
          statutory notice in this case containing respondent's                       
          determination of their liability for the negligence additions to            
          tax.                                                                        
               As a result of the decision upholding the adjustments to the           
          1983 partnership return of Arid Land, petitioners were assessed             
          on July 24, 2000, additional tax of $3,345.  Petitioners paid the           
          assessment on August 2, 2000.                                               
                                       OPINION                                        
               Petitioners argue that they are not subject to the additions           
          to tax for negligence because:  (1) The statute of limitations              
          prohibits assessment of the additions to tax; and (2) they                  








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