- 35 -
year. There is no evidence petitioners attempted to comply with
section 7872. We find petitioners were negligent in not
reporting income from the net debts between Mr. Cutts and ATV as
giving rise to loans with below-market rates to which section
7872 applies.
We hold petitioners liable for section 6662 accuracy-related
penalties for their 1997 tax year in reduced amounts to be
determined in the Rule 155 computation.
To give effect to the foregoing,
Decisions will be entered
under Rule 155.
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