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Federal income tax returns for 1998:2
Penalties
Accuracy-related Fraud1
Petitioner Deficiency Sec. 6662(a) Sec. 6663
Orneal & Martha $125,772 -- $25,154
OMK Company Trust 50,221 $10,044 --
OMK Family Trust 824 165 --
1Respondent determined in the alternative that, if Orneal and
Martha Kooyers are not liable for the fraud penalty, they are
liable for the accuracy-related penalty under sec. 6662(a).
Respondent concedes that Orneal and Martha Kooyers are not
liable for the fraud penalty under section 6663. Following that
concession we must first decide whether the OMK Company Trust and
OMK Family Trust (collectively the OMK trusts) should be
disregarded for Federal income tax purposes. We hold that the
OMK trusts are to be disregarded. Because the OMK trusts are
disregarded for Federal income tax purposes, we must decide five
additional issues.
First, we decide whether Orneal and Martha Kooyers
(petitioners) are taxable on income from Tamarisk Operations,
Ltd., and Fountain Global Trust. We hold that they are not.
Second, we decide whether petitioners are taxable on capital
gain of $6,008 as reported by the OMK trusts or $123,391 as
2Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for 1998, and Rule references
are to the Tax Court Rules of Practice and Procedure. Amounts
are rounded to the nearest dollar.
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