Holly Ruocco - Page 2

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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.                                                              
               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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