Ray W. and Marilyn S. Sowards - Page 2

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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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