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Federal income taxes for 1995, 1996, and 1997 and penalties under
section 6662(a) for those years, respectively, as follows:
Year Deficiency Sec. 6662(a) Penalty
1995 $334,589 $66,918
1996 24,739 4,948
1997 158,356 31,671
Respondent determined deficiencies in petitioners Carroll Janis
and Donna L. Seldin Janis’s (Carroll and Donna) Federal income
taxes for 1995, 1996, and 1997 and penalties under section
6662(a) for those years, respectively, as follows:
Year Deficiency Sec. 6662(a) Penalty
1995 $532,930 $106,586
1996 58,635 11,727
1997 169,248 33,849
The issues for decision in these consolidated cases are:
(1) Whether petitioners, who inherited an art gallery, can
calculate the gallery’s cost of goods sold using the undiscounted
value of the gallery’s collection of artwork rather than the
discounted value as determined for estate tax purposes and
(2) whether petitioners are liable for accuracy-related penalties
under section 6662(a) for 1995, 1996, and 1997.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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Last modified: May 25, 2011