Rene D. and Rosemary S. Valdes - Page 3

                                        - 2 -                                         
               Respondent determined deficiencies in petitioners’ Federal             
          income taxes and accuracy-related penalties as follows:                     
               Year           Deficiency             Sec. 6662(a)                     
               1996           $10,950             $2,190.00                           
               1997           10,007              2,001.40                            
               1998           11,643                   2,328.60                       
               After a concession by respondent,2 the issues are (1)                  
          whether petitioners3 are liable for taxes on unreported income in           
          the amounts of $32,810, $33,071, and $36,392 for the taxable                
          years 1996, 1997, and 1998, respectively, and (2) whether                   
          petitioners are liable for accuracy-related penalties under                 
          section 6662(a) for the years in issue.  Petitioners resided in             
          Tampa, Florida, at the time the petition was filed.                         
               During the examination of petitioners’ 1996, 1997, and 1998            
          Federal income tax returns, petitioner provided to respondent               
          unorganized boxes of receipts for his business and personal                 
          expenses.  Respondent calculated petitioner’s business expenses             
          using petitioners’ 1996, 1997, and 1998 returns.  Respondent                

               2   Respondent conceded that petitioners are entitled to a             
          dependency exemption for their daughter, Robyn M. Valdes, in the            
          1997 taxable year.                                                          
               3   Petitioner Rosemary S. Valdes did not appear at the                
          trial and did not sign the stipulation of facts.  With respect to           
          her, we dismiss this case for failure to prosecute.  Rule 123(b).           
          The decision, when entered, will be in the same amount as                   
          ultimately determined against petitioner Rene D. Valdes.  In the            
          opinion, references to petitioner are to Rene D. Valdes.                    

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