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petitioner had Federal income tax deficiencies of $540,192 for
1996 and $511,866 for 1997.
Respondent also determined that petitioner is liable for 20-
percent accuracy-related penalties under section 6662(a) because
petitioner was negligent or disregarded rules and regulations in
understating his taxable income, made substantial understatements
of income tax, and had not shown reasonable cause for the
understatements. Applying the 20-percent rate to the
deficiencies, respondent determined penalties of $108,038 for
1996 and $102,373 for 1997.
Petitioner timely filed an original petition and an amended
petition with this Court. In his amended petition, petitioner
argued that all adjustments respondent made were erroneous.
Petitioner claimed his trusts were valid, and that the grantor
trust rules do not apply because he held neither legal nor
equitable title to the trust assets. Petitioner in his amended
petition also asserted the “Delpit” issue: that the Tax Court
lacks jurisdiction over his petition because respondent made the
determination without sending him a 30-day letter, without
advising him of his administrative rights, and without giving him
an opportunity for adequate administrative review. According to
petitioner’s counsel: “This denial has cost Petitioner undue
burden of Tax Court litigation that could have been resolved
administratively.”
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