Frank Franklin - Page 10

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          sustained on the section 6662(a) penalty with respect to these              
          two items.                                                                  
               Respondent did not determine that the section 6662(a)                  
          penalty was applicable to petitioner's Schedule C disallowed                
          expenses; however, as noted above, respondent determined that the           
          penalty was applicable to the payments petitioner received from             
          Metropolitan Life Insurance Co.  With respect to this adjustment,           
          the Court notes that the payor, Metropolitan Life Insurance Co.,            
          withheld $119 in taxes on the taxable portion of the                        
          distribution.  On petitioner's income tax return, on page 2 of              
          Form 1040, line 52, Federal income tax withheld from Forms W-2              
          and 1099, petitioner claimed a credit of $3,779 for prepaid                 
          taxes.  However, on the Information Returns Master File                     
          Transcript that respondent offered into evidence, the transcript            
          reveals that petitioner's prepayments of tax through withholdings           
          totaled $3,895.  The difference between the transcript amount and           
          the amount petitioner claimed as a prepayment credit on his                 
          return is $116.  Since both the tax return and the transcript               
          used rounded numbers, it is evident to the Court that, while                
          petitioner and his wife failed to report the Metropolitan Life              
          Insurance Co. income, they likewise failed to claim as a credit             
          the taxes that had been withheld by Metropolitan Life Insurance             
          Co. on the distributions made to petitioner.  Therefore, the                
          Court is not convinced that petitioner negligently or                       

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