Alan C. and Esther R. Schwemmer - Page 4

                                        - 3 -                                         
               On March 27, 2000, respondent issued a joint notice of                 
          deficiency to petitioners.  In the notice, respondent determined            
          deficiencies in petitioners’ Federal income taxes together with             
          penalties as follows:                                                       
          Year         Deficiency     Sec. 6662(a) penalty                            
          1996         $10,500              $2,100                                    
               1997          10,294               2,059                               
          The deficiencies were based on respondent’s determinations, which           
          are described in pertinent part below.  Respondent determined               
          that the BVE and Sweetbush Business Trusts, purportedly created             
          by petitioners, are shams with no economic substance and                    
          increased petitioners’ business income by the gross receipts of             
          the trusts, less ordinary and necessary business expenses.                  
          Respondent also determined gross income from the bank deposits              
          method, flowthrough losses from the disregarded trusts, and                 
          increased Social Security benefits.  Respondent further                     
          determined that petitioners were subject to self-employment tax,            
          with a deduction for one-half of the self-employment tax.                   
               Petitioners received the aforesaid notice of deficiency.               
          Petitioners did not petition the Tax Court with respect to the              
          notice of deficiency.                                                       
               By notice of determination dated April 15, 2002, respondent            
          informed petitioners that the notice of liens filed against them            
          would not be withdrawn because petitioners’ request for a hearing           
          did not address legal or procedural errors relating to either the           

Page:  Previous  1  2  3  4  5  6  7  8  9  Next

Last modified: May 25, 2011