Ronald L. Heidrick - Page 3




                                        - 2 -                                         

               Respondent determined deficiencies of $5,354, $14,599, and             
          $6,159 in petitioner’s Federal income taxes for 1994, 1995, and             
          1996, respectively, a $21 addition to tax under section                     
          6651(a)(1) for 1995, and accuracy-related penalties under section           
          6662(a) in the amounts of $1,070.80, $2,919.80, and $1,231.80,              
          respectively, for the years at issue.                                       
               The issues for decision are:  (1) Whether petitioner’s gold            
          mining activity was an activity not engaged in for profit under             
          section 183(a) during the years in question; (2) whether                    
          petitioner is entitled to certain deductions attributable to the            
          activity; (3) whether petitioner is liable for an addition to tax           
          under section 6651(a)(1) for 1995; and (4) whether petitioner is            
          liable for accuracy-related penalties under section 6662(a) for             
          1994, 1995, and 1996.2                                                      
               Some of the facts were stipulated.  Those facts, with the              
          exhibits annexed thereto, are so found and are made part hereof.            
          Petitioner’s legal residence at the time the petition was filed             
          was Georgetown, California.                                                 
               During the years at issue, petitioner worked as a deck                 
          engineer and hydraulic equipment operator for a dredging and                


               2    Numerous other issues were settled by the parties both            
          prior to and during trial involving a child care tax credit, a              
          cost of goods sold deduction, certain unreimbursed employee                 
          business expenses, the amount of applicable self-employment tax,            
          and amounts allowable on Schedule C, Profit or Loss From                    
          Business, as expenses relating to the business activity at issue.           




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