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Prior to trial, petitioners filed an amended return and
conceded the deficiency and paid it in full. The remaining issue
for decision is whether petitioners are liable for the accuracy-
related penalty under section 6662(a) due to a substantial
understatement of the amount of their income tax, as defined in
section 6662(d).
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and exhibits received into evidence are
incorporated herein by reference. At the time the petition in
this case was filed, petitioners resided in Los Altos,
California.
During taxable year 2000, petitioner Michael J. Sullivan
(Mr. Sullivan) was employed as a Program Manager with CEMAX-ICON,
Inc. (CEMAX), and earned approximately $105,000. Mr. Sullivan
received biweekly pay statements from CEMAX, and CEMAX reported
this income to the Internal Revenue Service on Form W-2, Wage and
Tax Statement. Mr. Sullivan also received approximately $182,000
in salary and severance payments from another position he had
held with Phillips Silicon Valley Center (Phillips).
For tax year 2000, petitioners timely filed a Form 1040, U.S
Individual Income Tax Return, which had been prepared by a
Certified Public Accountant. There were several Forms W-2 and
Forms 1099-R, Distributions From Pensions, Annuities, Retirement
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