Frederick Smith, Jr. and Vanessa Smith - Page 5




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               Fantasy Sports 25% D...  Fantasy Payment     16,250                    
               Fantasy 50% payment      Fantasy Payment     32,500                    
               Fantasy Fee Final/VSS    Fantasy Payment     20,170                    
                                                            68,920                    
          On the 1997 Schedule C, petitioners reported gross receipts of              
          $60,245, total expenses of $83,481, and a loss of $23,236.                  
               Respondent determined in the notice of deficiency dated July           
          12, 2001,2 that petitioners failed to report income of $27,330.             
          Respondent determined petitioners’ unreported income by an                  
          examination of petitioners’ records, including the business bank            
          account of OTFP.  The unreported income was determined as                   
          follows:                                                                    
                    Deposits                 $87,765                                  
                    Less returned checks     190                                      
                    Net deposits             87,575                                   
                    Gross receipts reported  60,245                                   
                    Unreported income        27,330                                   
          Respondent also determined that petitioners are liable for an               
          addition to tax under section 6651(a)(1) because the 1997 return            
          was not timely filed.  Further, respondent determined that                  
          petitioners are liable for an accuracy-related penalty under                




               2  Petitioners have not argued that the period of                      
          limitations for assessment under sec. 6501(a) expired though                
          respondent issued the notice of deficiency more than 3 years                
          after petitioners filed the 1997 return.  The 1997 return was               
          filed May 14, 1998, and the notice of deficiency was issued on              
          July 12, 2001.  In any event, since we conclude that petitioners            
          omitted from gross income an amount properly includable therein             
          which is greater than 25 percent of the amount of gross income              
          reported in the return, the 6-year period of limitations for                
          assessment is applicable.  Sec. 6501(e)(1)(A).                              




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