Danny and Ruth Kosbar - Page 2

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          interest.  We hold he did not.  Unless otherwise indicated,                 
          section references are to the applicable versions of the Internal           
          Revenue Code.  Rule references are to the Tax Court Rules of                
          Practice and Procedure.                                                     
                                  FINDINGS OF FACT                                    
               Some facts were stipulated.  We incorporate herein by this             
          reference the parties’ stipulation of facts and the exhibits                
          submitted therewith.  We find the stipulated facts accordingly.             
          Petitioners are husband and wife.  They resided in Hastings,                
          Michigan, when their petition was filed with the Court.                     
               Petitioners filed timely 1990 and 1991 joint Federal income            
          tax returns and paid the reported taxes.  Respondent audited                
          those returns in 1993 and disallowed certain claimed business               
          expenses.  Respondent’s disallowance of these expenses increased            
          petitioners’ tax liability for 1990 and 1991.  Respondent also              
          determined during the audit that petitioners were liable for 1990           
          and 1991 accuracy-related penalties under section 6662(a).                  
               On September 17, 1993, petitioners agreed to the assessment            
          of the amount of taxes and penalties determined by respondent.              
          Subsequently, on several occasions, petitioners offered to                  
          respondent a compromise of the amount of those assessed amounts.            
          Respondent rejected each of these offers.                                   
               On December 28, 2000, petitioners filed with respondent                
          Forms 843, Claim for Refund and Request for Abatement, for 1990             






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