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related penalties pursuant to section 6662(a) for the taxable
years 1994, 1995, and 1996 as follows:
Addition to Tax Penalties
Year Deficiency Sec. 6651(a)(1) Sec. 6662(a)
1994 $11,729 $253 $2,346
1995 16,769 -- 3,354
1996 634,289 -- 126,858
For convenience, we refer to David M. and Teri L. Saykally as
petitioners and David M. Saykally as petitioner throughout this
opinion.
After concessions,3 the remaining issues to be decided are
as follows:
(1) Whether petitioners are entitled to deduct expenses
claimed for research and development for taxable years 1995 and
1996 in the respective amounts of $67,534 and $1,421,645;
(2) Whether petitioners are entitled to deduct certain
expenses on their Schedules C, Profit and Loss From Business, for
the taxable years 1994, 1995, and 1996; and
3The parties have conceded that there will be no deficiency
in tax due from or overpayment in tax due to petitioner CPSG,
Inc. Therefore, an accuracy-related penalty under sec. 6662(a)
will not be imposed. Accordingly, the parties have resolved all
the issues in docket No. 1821-00.
With respect to petitioners in docket No. 555-00, respondent
has conceded, inter alia, that petitioners are not liable for the
sec. 6651(a)(1) addition to tax for the taxable year 1994.
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