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Addition to Tax Penalty
Year Deficiency Sec. 6651(a)(1) Sec. 6662(a)
1996 $725,255 $171,058 $145,051
1997 4,494 -- –-
After a concession by petitioners, the issues for decision
are: (1) Whether any amount of the $2,000,000 that petitioner
received from a settlement in 1996 is excludable from gross
income under section 104(a)(2); (2) whether petitioners are
liable for an addition to tax under section 6651(a)(1); and
(3) whether petitioners are liable for an accuracy-related
penalty under section 6662(a). The parties agree that the
deficiency for 1997 depends on our resolution of the section
104(a)(2) issue for 1996.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference.
Petitioners resided in Texas during the years in issue;
petitioners resided in Missouri at the time they filed their
petition in this case.
Empire Gas Corp.
Paul S. Lindsey, Jr. (petitioner), has been involved in the
propane industry since February 1964. In August 1967, petitioner
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