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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.
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Last modified: May 25, 2011