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Respondent determined deficiencies in petitioners’ Federal
income taxes, additions to tax, and penalties as follows:
Additions to Tax Penalties
Year Deficiency Sec. 6651(a)(1) Sec. 6662
1992 $25,952 $5,929 $5,190
1993 5,914 870 1,183
1994 12,751 2,597 2,550
The issues for decision for each year in issue are: (1)
Whether petitioners underreported income; (2) whether petitioners
are entitled to depreciation deductions greater than those
respondent allowed; (3) whether petitioners are entitled to a
deduction for charitable contributions; (4) whether petitioners
had reasonable cause for their failure to file a timely Federal
income tax return; and (5) whether the underpayment of tax
required to be shown on petitioners’ Federal income tax return is
due to negligence.
Background
Some of the facts have been stipulated and are so found.
Petitioners are husband and wife. They filed an untimely Federal
income tax return for each year in issue. At the time the
petition was filed, they resided in Indianapolis, Indiana.
William M. Hawkins (petitioner) is an attorney. He has
practiced law since 1971 and did so as a sole practitioner during
the years in issue. Petitioners’ Federal income tax return for
each year in issue includes a Schedule C, Profit or Loss From
Business, on which income and expenses attributable to
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