Wyn Dee Stone - Page 5

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          respondent stating that petitioner excluded the $75,000 because             
          petitioner was told by several people (including oral advice by             
          an Internal Revenue Service (IRS) employee) that the $75,000 was            
          not includable in petitioner’s 1998 gross income.  Upon the                 
          failure of petitioner to file a timely petition, the deficiency             
          and penalty were assessed.  Responding to inquiries from                    
          petitioner and petitioner’s counsel, respondent abated the                  
          section 6662(a) penalty on June 4, 2001, but did not change the             
          determination that the proceeds were includable in petitioner’s             
          1998 gross income.2                                                         
          IV. Collection Proceeding                                                   
               On May 27, 2002, respondent issued to petitioner a Letter              
          1058, Final Notice of Intent to Levy and Notice of Your Right to            
          a Hearing.  On June 9, 2002, petitioner timely filed a Form                 
          12153, Request for a Collection Due Process Hearing (hearing).              
          At the November hearing,3 petitioner asserted that the $75,000              
          was excludable from gross income and requested an abatement of              
          penalties and interest.  Petitioner submitted an offer-in-                  
          compromise (OIC) for $8,000, but it was rejected because                    
          petitioner had the ability to fully pay the tax liability by an             
          installment agreement.  On December 5, 2002, petitioner filed a             

               2  Respondent assessed an addition to tax under sec.                   
          6651(a)(3) on various dates in 2001.                                        
               3  Petitioner met with representatives of the IRS a number             
          of times between November 2002 and October 2003.                            





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