Thomas J. and Bonnie F. Ratke - Page 2

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          respondent sent petitioners a notice of deficiency, determining a           
          $20,710 deficiency and a $4,142 section 6662(a)1 penalty.  In               
          response, on March 29, 1996, petitioners sent their petition to             
          the Court and a second amended return relating to 1993 to the               
          Internal Revenue Service.  On April 2 and 3, 1996, respectively,            
          the petition and the second amended return were filed.                      
               Petitioners, in the petition, disputed the entire amount of            
          the deficiency and penalty as follows:                                      
               The Commissioner has asserted deficiencies in income                   
               taxes and additions to taxes for the Petitioners                       
               taxable year 1993, all of which are in dispute, as                     
               Deficiency:  Increase in Tax       $20,710                             
               Penalties:  Section 6662(a)        $ 4,142                             
          The petition also stated that “The Petitioners have correctly               
          reported the sale of the business property on their amended 1993            
          individual income tax return, form 1040X”.2                                 
               On May 27, 1996, respondent made a $12,655 assessment for              
          the amount shown as tax on petitioners’ second amended return and           
          sent petitioners a notice and demand for payment.  Respondent               
          also sent petitioners an audit statement, determining a $2,931              

               1  Unless otherwise indicated, all section references are to           
          the Internal Revenue Code in effect for the year in issue.                  
          Dollar amounts are generally rounded to the nearest dollar.                 
               2  The petition refers to an “amended 1993 individual income           
          tax return”.  At the time they mailed the petition, petitioners             
          had submitted two amended returns to the Internal Revenue                   
          Service.  Thus, it is not clear whether petitioners are referring           
          to the first or the second amended return.                                  

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