William A. Wheelis - Page 2




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          a penalty should be imposed against petitioner under section                
          6673(a)(1).                                                                 
               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                                       
               The facts in this case have been deemed stipulated pursuant            
          to Rule 91(f).  Petitioner was a resident of Morristown, Arizona,           
          at the time that the petition in this case was filed.                       
               During 1995, petitioner received interest income totaling              
          $48 and an Arizona tax refund of $755.  He received a                       
          distribution of $13,586 from an individual retirement account.              
          Petitioner’s age did not exceed 59-1/2 at the time of the                   
          distribution.                                                               
               During 1995 and 1996, petitioner was employed by Arizona               
          Public Service Co.  He received compensation of $64,090.49 in               
          1995 and $68,123 in 1996 from Arizona Public Service Co.  The               
          Arizona Public Service Co. withheld $4,088.67 from petitioner’s             
          wages in 1995 and $5,649.98 from petitioner’s wages in 1996.                
               Petitioner submitted to the Internal Revenue Service                   
          documents purporting to be 1995 and 1996 Federal income tax                 
          returns.  Those documents reported petitioner’s compensation                
          earned in each year and then deducted the equivalent amount as              






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