Ronald L. DeVault - Page 8

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          to the Form 1120S, inter alia, was a Schedule K-1 for each                  
          shareholder.  Petitioner’s Schedule K-1 reported his pro rata               
          share as follows:  Ordinary income of $27,489; charitable                   
          contributions of $2,499; investment interest income of $20; and             
          depreciation of $1,690 (petitioner’s 2000 Schedule K-1).                    
               Petitioner timely filed a Form 1040EZ, Income Tax Return for           
          Single and Joint Filers With No Dependents, for 2000.  Petitioner           
          did not report any of the items reported on petitioner’s 2000               
          Schedule K-1.                                                               
               In the notice of deficiency, respondent determined that                
          petitioner failed to report shareholder interest income of $20              
          and shareholder ordinary income of $27,489.  Respondent further             
          determined that petitioner is liable for the accuracy-related               
          penalty under section 6662(a) for a substantial understatement of           
               Petitioner timely filed a petition with the Court disputing            
          the determined deficiency as well as the accuracy-related                   
          penalty.  Paragraph 4 of the petition states as follows:                    
               The Notice of Deficiency was calculated based upon                     
               information reported on IRS Form 1120S filed on behalf                 
               of Union Machine, Inc., EIN 91-1688285, for the year                   
               ending 2000.  The Form 1120S erroneously reported that                 
               I was a shareholder of Union Machine, Inc.  I do not                   
               believe that I was a shareholder of Union Machine for                  
               the year ending 2000 (or for any part of the year                      
               ending 2000).  The Schedule K-1, which the IRS has                     
               relied upon to determine the Notice of Deficiency,                     
               should not have been issued in my name.  Accordingly,                  
               there is no basis for the Notice of Deficiency.                        

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