Shannon D. Mullins - Page 12

                                       - 11 -                                         
          stock on the date of disposition was $9,2576, and petitioner                
          would have a realized and recognized capital gain of $30,743                
          under section 1001 for 2001.  However, since petitioner received            
          a payment of $8,000 from Mr. Taylor in 2001, and a payment of               
          $20,000 in 2002, the amount of income petitioner must take into             
          account for 2001 from the sale of his shares of Edgington Mullins           
          stock should be computed under the installment method as                    
          described herein.7                                                          
          C.  Addition to Tax                                                         
               1.  Failure To File Under Section 6651(a)(1)                           
               Generally, income tax returns made on the basis of the                 
          calendar year must be filed on or before the 15th day of April              
          following the close of the calendar year.  Sec. 6072(a).  Section           
          6651(a)(1) imposes an addition to tax for a taxpayer’s failure to           
          file a required return on or before the specified filing due                
          date, including extensions.  The amount of the addition is equal            
          to 5 percent of the tax required to be shown on the return if the           

               6  Petitioner’s Schedule K-1, which was prepared on the                
          basis that petitioner was a 50-percent shareholder for the entire           
          taxable year 2001, reflected a stock basis at the end of 2001 of            
          $7,525.  In Respondent’s Memorandum of Authorities, filed                   
          posttrial on Nov. 16, 2004, respondent conceded that petitioner             
          had a basis in his shares of Edgington Mullins stock of $9,257 on           
          the date of sale.                                                           
               7  A Rule 155 computation will be required in order to                 
          calculate the (1) pro rata share of petitioner’s S corporation              
          income and (2) the gain or loss from the sale of his interest in            
          the S corporation.                                                          

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  Next

Last modified: May 25, 2011