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Penalty
Year Deficiency Sec. 6662
1993 $18,873 $3,775
1994 47,756 9,551
1995 51,584 10,317
The issues presented for our consideration are: (1) Whether
a $116,000 settlement payment is excludable from gross income
under section 104(a)(2);1 (2) whether $48,4202 in payments was
nontaxable loans or taxable advances; and (3) whether petitioners
are subject to section 6662(a) penalties for substantial
understatement of tax or negligent disregard of the rules and
regulations. To the extent that we hold amounts are includable
in gross income, petitioners do not contest that such income is
subject to self-employment tax.
FINDINGS OF FACT3
Petitioners Edward P. Knoll and Mary King-Knoll resided in
Barrington, Illinois, at the time their petition was filed.
During 1965, following his graduation from Northwestern
1 All section references are to the Internal Revenue Code in
effect for the years at issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
2 If the $116,000 and/or $48,420 amounts are includable in
income, we must also decide the proper year for inclusion.
3 The parties’ stipulation of facts is incorporated by this
reference.
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Last modified: May 25, 2011