Joyce E. & Jerome G. Beery - Page 2

                                        - 2 -                                         
                                             Penalty                                  
                    Year      Deficiency        Sec. 6662                             
                    1998      $30,752        $6,150                                   
                    1999      32,136              6,427                               
               After concessions,2 the issues for decision are as follows:            
               (1) Whether petitioners are entitled to deduct net operating           
          loss carryforwards computed with respect to 1975 on their Federal           
          income tax returns for 1998 and 1999;                                       
               (2) whether petitioners are entitled under section 170 to              
          deduct charitable contributions for the years 1998 and 1999 in              
          excess of those already allowed by respondent; and                          
               (3) whether petitioners are liable under section 6662(a) and           
          (b) for accuracy-related penalties due to negligence and                    
          substantial understatement of income tax for 1998 and 1999.                 
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
          The stipulation of facts is incorporated herein by this                     
          reference.  Petitioners, who filed joint Forms 1040, U.S.                   
          Individual Income Tax Return, for 1998 and 1999, resided in Los             
          Alamos, New Mexico, when their petition in this case was filed.             


               2In the notice of deficiency, respondent determined that               
          petitioners were not entitled to home mortgage interest                     
          deductions for 1998 and 1999 in the amounts of $2,880 and $1,617,           
          respectively.  Respondent conceded these amounts in the                     
          stipulation of facts.  Also at issue in this case are adjustments           
          to itemized deductions for 1998 and 1999, which are                         
          computational.  Additionally, petitioners conceded that a net               
          operating loss (NOL) from 1976 had been used completely in years            
          before the years at issue.                                                  





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