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INCOME (WHIPSAW)” and stated that “We have adjusted your gross
income to include amounts received for grain income for
$751,988.00 in 1994.” No further explanation was provided.
Respondent also determined that Russell and Clarice were liable
for the accuracy-related penalties pursuant to section 6662(a)
for 1994 and 1995 with respect to certain adjustments contained
in the notice of deficiency. These adjustments included the
increase in gross income for grain income, issues subsequently
conceded by Russell and Clarice relating to oil and gas
activities, and an issue subsequently conceded by respondent
relating to certain royalty income.
In their petition, Russell and Clarice alleged that
respondent “erroneously included within the taxpayers’ gross
income grain income in the amount of $751,988 for the tax year
1994". In his answer, respondent denied this allegation but did
not elaborate on the reason for the inclusion of the additional
amount in gross income.
OPINION
The primary issue in this case involves the proper
allocation between the estate and Russell of the grain sales
income for 1994. Respondent has protected the Government from a
potential whipsaw by taking inconsistent positions in his notices
of deficiency. Respondent’s primary argument is that the estate
and Russell are each liable for income tax on their respective
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