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respondent filed a Motion to Dismiss for Failure to Properly
Prosecute and for a Penalty Under I.R.C. Section 6673 (motion to
dismiss). Unless otherwise indicated, all section references are
to the Internal Revenue Code in effect for the years in issue,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
Background
Respondent’s determinations at issue in this case are set
forth in two separate statutory notices of deficiency, both dated
January 26, 2001. The notice for 1996 was addressed to Kyle W.
Storks (Storks) and Holly L. Ruocco (petitioner). The deficiency
resulted primarily from an increase in income on Schedule C,
Profit or Loss From Business, for Canyon State Chiropractic that
was explained in the notice for 1996 as follows:
1.B SCH C–CANYON STATE
During the taxable period ended December 31, 1996,
income earned by you was incorrectly reported by Canyon
State Chiropractic and other entities. It is
determined that this income from services performed by
you in connection with Canyon State Chiropractic and
other entities is taxable to you. See enclosed audit
report. Taxable income for the taxable period ended
December 31, 1996 is increased $217,209.00.
The attached audit report showed: (1) The unreported gross
receipts or sales of Canyon State Chiropractic for 1996 were
determined as the deposits into three bank accounts less the
amounts reported on the return as filed and (2) a total of
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