William F. Middleton - Page 2




                                        - 2 -                                         
                              Additions to Tax        Penalties                       
                                   Sec.          Sec.         Sec.                    
         Year       Deficiency      6651(a)(1)      6662(a)      6663(a)              
         1989    $12,411     ---    --- $9,308                                        
         1990  39,796     ---    --- 29,847                                           
         1991       50,239         $12,957        $84            37,366               
               All section references are to the Internal Revenue Code for            
         the years in issue, and all Rule references are to the Tax Court             
         Rules of Practice and Procedure, unless otherwise indicated.                 
               The issues remaining1 for our consideration are:                       
         (1) Whether, for 1990 and 1991, petitioner is entitled to                    
         Schedule C, Profit or Loss From Business, deductions in excess of            
         those allowed or conceded by respondent; (2) whether petitioner              
         is liable for the section 6663(a) fraud penalty for 1990 or 1991;            
         (3) alternatively, whether petitioner is liable for the section              
         6662(a) accuracy-related negligence penalty for 1990 or 1991; (4)            
         whether petitioner is liable for the section 6662(a) accuracy-               
         related negligence penalty for 1991 with respect to the portion              
         of the income tax deficiency that involves the omission of                   
         interest income or a claimed loss from the sale of a taxi; and               




               1 Respondent conceded the income tax deficiency and the sec.           
         6663(a) penalty for petitioner’s 1989 tax year.  For the 1991                
         taxable year, respondent conceded that petitioner is entitled to             
         Schedule C deductions in addition to those allowed in the notice             
         of deficiency.  For 1991, petitioner claimed $254,787 in                     
         deductions on his Schedule C, and respondent, in the statutory               
         notice of deficiency, allowed $112,023.  During pretrial                     
         activity, respondent conceded that, in addition to those allowed             
         in the notice of deficiency, petitioner is entitled to $45,184 of            
         business deductions.                                                         




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