Robert K. and Dawn E. Lowry - Page 2

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               I.R.C., accuracy-related penalty on grounds of failure                 
               to prove that they acted with reasonable cause and good                
               faith with respect to their substantial understatement                 
               of income tax for 1994 and 1995.                                       


               Daniel C. Ertel, for petitioners.                                      
               Lydia A. Branche, for respondent.                                      


                                 MEMORANDUM OPINION                                   

               NIMS, Judge:  Respondent determined the following                      
          deficiencies and penalties with respect to petitioners’ Federal             
          income taxes for the taxable years 1994 and 1995:                           
                         Year      Deficiency     Penalties                           
                                             Sec. 6662(a)                             
                         1994      $30,096        $6,019                              
                         1995      179,066        35,813                              
               Unless otherwise indicated, all section references are to              
          sections of the Internal Revenue Code in effect for the years in            
          issue.                                                                      
               After concessions by petitioners the issues remaining for              
          decision are:                                                               
               (1)  Whether a section 1231 gain in the amount of $774,982             
          was realized and should be recognized, alternatively, in 1993 or            
          1994; and                                                                   
               (2)  whether petitioners are liable for section 6662(a)                
          penalties in 1994 and 1995.                                                 






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