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return. Respondent also disallowed the $1,005 net operating loss
and imposed the accuracy-related penalty under section 6662(a).
In the notice of deficiency issued to the OMK Company Trust,
respondent disallowed all items deducted on the trust’s 1998
return, increasing the trust’s taxable income by $129,899.
In the notice of deficiency issued to petitioners,
respondent determined that the OMK trusts should be disregarded
for Federal income tax purposes and consequently made the
following adjustments to petitioners’ income:
Item Adjustment
Taxable Social Security $25,104
Capital gain 123,791
Self-employment tax (7,191)
Itemized deductions (10,127)
Standard deduction 8,800
Exemptions 5,400
Service income Mr. Kooyers 55,974
Fiduciary fees Mr. Kooyers (2,500)
Service income Mrs. Kooyers 50,814
Fiduciary fees Mrs. Kooyers (2,500)
Dividend income 2,089
Interest income 168,868
Respondent determined that the income from P.I. Ministries
was subject to self-employment tax of $15,089. Respondent also
determined that petitioners were liable for the civil fraud
penalty under section 6663 or, alternatively, for an
accuracy-related penalty under section 6662(a) and (b)(1) for
negligence or disregard of rules or regulations.
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