- 2 -
$42,556, respectively.2 After concessions, the issues for
decision are: (1) Whether petitioners failed to report income
from mining activities in the amount of $515,993 for 1988. We
hold they did. (2) Whether petitioner, Mr. Hamilton, is liable
for an addition to tax for fraud pursuant to section 6653(b)(1)
for 1988.3 We hold he is. (3) Whether petitioners substantially
understated their Federal income tax for 1988 within the meaning
of section 6661. We hold they did.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. Petitioners, Bill Fred
Hamilton (Mr. Hamilton) and Connie Hamilton (Mrs. Hamilton),
husband and wife, resided in Barbourville, Kentucky, at the time
they filed the petition.
Mr. Hamilton was engaged in the business of brokering coal
during 1982 through 1989. Mr. Hamilton owned a 50-percent
interest in C.Y. Smith Corp. (CYS), a corporation engaged in
mining and brokering coal. He also indirectly managed and ran
the day-to-day operations of R & B Excavating, Inc. (RBE), an
2 Respondent has conceded a portion of the deficiency
amount.
3Respondent concedes that Mrs. Hamilton is not liable for a
fraud-related addition to tax under sec. 6653(b).
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