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2000
Type of Adjustment Amount of Increase
Itemized Deductions $15,263
Rental Income 19,800
Dividends 488,955
____________________________________________
Total Adjustments for 2000: $524,018
Respondent increased petitioner’s tax liability by $323,517 and
$207,511, and imposed section 6662(a) penalties of $64,703.40 and
$41,502.20 for 1999 and 2000, respectively.
On October 22, 2003, petitioner filed his petition with the
Court, alleging that he did not receive rental income, that
respondent improperly recharacterized the loans as constructive
dividends, and that he was not liable for the section 6662(a)
accuracy-related penalties as set forth in respondent’s notice of
deficiency.
OPINION
A. Petitioner Did Not Have Unreported Rental Income
Respondent determined that petitioner received but failed to
report rental income in the amounts of $16,200 in 1999 and
$16,200 in 2000. Petitioner bears the burden of proof to show
that respondent erred in making this determination. Rule 142(a).
On the 1999 residential loan application, petitioner
reported “net rental income” of $1,350 from his Los Angeles
condominium. Ms. Kacheris, respondent’s examining agent,
testified that her sole reason for determining that petitioner
received rental income of $16,200 in 1999 and $16,200 in 2000 was
from statements made by petitioner on the loan application.
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Last modified: May 25, 2011