Robert Lee and Rebecca Waters - Page 4




                                        - 3 -                                         
               (3) Whether petitioners are liable for an addition to tax              
          under section 6651(a)(1) for failure to timely file an income tax           
          return.  We hold that they are.                                             
                                     Background                                       
               Some of the facts have been stipulated, and they are so                
          found.  Petitioners resided in Southfield, Michigan, at the time            
          that their petition was filed with the Court.                               
          A.  Petitioners                                                             
               During 1997, the taxable year in issue, petitioner Robert              
          Lee Waters (petitioner) was employed full-time as a teacher by              
          the Board of Education of Detroit, Michigan.  During that same              
          year, petitioner Rebecca Waters was a housewife.                            
          B.  Acquisition of the Hazelwood Property                                   
               In June 1986, a group of six individuals (the land contract            
          vendees) purchased a parcel of improved real estate in Detroit,             
          Michigan (the Hazelwood property), under a land contract.  The              
          land contract vendees included petitioners, petitioner’s father,            
          Marland and Dortha Moore, and Marland Moore’s mother.  The                  
          Hazelwood property consisted of a 38-unit, 4-story apartment                
          building with an elevator.  The memorandum of land contract that            
          was recorded with the Register of Deeds for Wayne County,                   
          Michigan, did not disclose the purchase price of the Hazelwood              
          property.                                                                   








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