Charles M. Fatta and Mary T. Oleske - Page 3




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               Respondent determined deficiencies of $7,064, $8,723, and              
          $8,390 in petitioners' Federal income taxes, respectively, for              
          1997, 1998 and 1999, additions to tax under section 6651(a)(1) of           
          $364 and $963, respectively, for 1998 and 1999, and penalties               
          under section 6662(a) in the amounts of $1,413, $1,745, and                 
          $1,678, respectively, for the 3 years at issue.  At trial, the              
          parties filed written stipulations that provided for settlement             
          of all issues except the additions to tax under section                     
          6651(a)(1) and the penalties under section 6662(a).2                        



               2    The adjustments in the notice of deficiency included              
          the disallowance of all the charitable contribution and other               
          miscellaneous expense deductions petitioners had claimed on                 
          Schedule A, Itemized Deductions, for each of the years at issue.            
          As a result of these adjustments, the remaining claimed itemized            
          deductions for each year were less than the standard deduction              
          allowed under sec. 63(c); consequently, petitioners were allowed            
          the standard deduction in the notice of deficiency.  In the                 
          stipulations filed at trial, the parties agreed to petitioners'             
          entitlement to some charitable contribution and other                       
          miscellaneous deductions for each of the years in question, thus            
          entitling petitioners to itemize their deductions in lieu of the            
          standard deduction.  In the notice of deficiency, respondent                
          determined that petitioners failed to include $1,405 in capital             
          gains on their 1998 return.  The parties agree that petitioners             
          realized capital gain income of $1,405 for 1998.  Since                     
          petitioners' return for 1998 did in fact include capital gain               
          income of $1,409, it appears that petitioners overreported this             
          income by the amount of $4.  Respondent also determined in the              
          notice of deficiency that petitioners failed to report $437 in              
          dividend income on their 1999 return.  In the stipulation,                  
          petitioners agree to this adjustment.  Finally, several items of            
          expenses claimed by petitioners on a rental real estate activity            
          for the 3 years in question were disallowed in the notice of                
          deficiency.  In the stipulation, the parties agreed to the                  
          amounts petitioners were entitled to as deductions for the 3                
          years at issue.                                                             




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