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tax, and penalty with respect to petitioners’ Federal income
taxes for 1998:1
Harlan D. Edwards:
Additions to Tax
Deficiency Sec. 6651(a)(1)1 Sec. 6654
$42,165 $10,541 $1,929
Floors by Harlan, Jody Edwards, Trustee:
Penalty
Deficiency Sec. 6662(a)
$30,232 $6,046
1 In his answer, respondent asserted a modification to
the addition to tax under sec. 6651(a) determined in
Harlan D. Edwards’s notice of deficiency, proposing
instead a revised amount under sec. 6651(a)(1) coupled
with an addition to tax pursuant to sec. 6651(a)(2).
On brief, respondent does not address the asserted sec.
6651(a)(2) addition. Accordingly, we deem respondent
to have abandoned the position taken in the answer.
After concessions, the issues remaining for decision are:
(1) Whether income reported by petitioner Floors by Harlan,
Jody Edwards, Trustee (Floors Trust), is includible in the gross
income of petitioner Harlan D. Edwards (Harlan) because Floors
Trust is a sham that is disregarded for Federal income tax
purposes;
(2) whether Harlan failed to report income of $6,908;
1 All section references are to the Internal Revenue Code in
effect for the year in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
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