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Penalty
Year Deficiency Sec. 6662
1994 $51,294 $10,259
1995 58,018 11,604
1996 45,101 9,020
1997 25,635 5,127
The issues for decision are: (1) Whether the deductions taken by
petitioner Robert Schwartz (Mr. Schwartz) and petitioner Diane
Schwartz (Mrs. Schwartz) (collectively, petitioners) related to
flowthrough losses incurred by Diane Racing International’s
(Diane Racing’s) yacht activity were from an activity entered
into for profit for 1994, 1995, 1996, and 1997 (years in issue)
within the meaning of section 183;1 and (2) whether petitioners
are liable for accuracy-related penalties under section 6662.2
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time they filed
the petition, petitioners resided in Islip, New York.
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
2 Petitioners also dispute the allowable portion of their
itemized deductions claimed for each of the years in issue. As
this issue is computational, we leave it for the parties to
compute in accordance with this decision.
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Last modified: May 25, 2011