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additions to tax pursuant to section 6654,1 accuracy-related
penalties pursuant to section 6662(a), and fraud penalties
pursuant to section 6663 for the taxable years 1995, 1996, and
1997, in the following amounts:
Additions to Tax Penalties
Year Deficiency Sec. 6654 Sec. 6662(a) Sec. 6663
1995 $98,690 -- $19,738.00 --
1996 61,038 $305.73 1,150.80 $41,463.00
1997 24,818 66.23 774.60 15,708.75
After a concession by respondent the issues to be decided
are as follows:
(1) Whether funds deposited into a bank account held in the
name of a purported trust are taxable income for the taxable
years 1995, 1996, and 1997 in the respective amounts of $58,057,
$149,774, and $58,622;
(2) Whether petitioners failed to report $7,725 as
additional income in 1997 relating to petitioner Ray Sowards’s
law practice;
(3) Whether respondent erroneously disallowed deductions for
expenses allegedly incurred in 1996 and 1997 relating to
petitioner Ray Sowards’s law practice;
1All section references are to the Internal Revenue Code in
effect for the taxable years at issue, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
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Last modified: May 25, 2011