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proved a substantial omission of income under section 6501(e)1 to
extend the period of limitations to 6 years.2
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time they filed
their petition, Paul Tanner (hereinafter, petitioner) and Beverly
Tanner resided in Dallas, Texas.3
At the time of trial, petitioner was 70 years old and
retired. Before his retirement, petitioner bought, sold, and
invested in private and public companies. In 1992, petitioner
planned to acquire control of Polyphase Corp. (Polyphase).
Before Polyphase entered into negotiations with petitioner,
it required petitioner to sign a “lockup agreement”. This lockup
agreement was a contractual obligation that restricted for 2
years petitioner’s ability to dispose of any Polyphase stock that
he might acquire while he had more than 5 percent beneficial
ownership in the corporation.
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue.
2 Petitioners also argue that they are entitled to a
deduction for personal exemptions of $4,900. As the deduction
for personal exemptions is computational, we leave it for the
parties to compute in accordance with this decision.
3 Petitioners filed a joint return for the 1994 taxable
year.
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