-3-
Respondent determined that petitioners Timothy E. and Mary
L. Breeding were liable for a $13,232 deficiency and a $2,232
accuracy-related penalty for 2000. For 2001, respondent
determined that petitioners Mr. and Mrs. Breeding were liable for
a $13,482 deficiency and a $2,284 accuracy-related penalty.
After concessions,4 there are three issues for decision.
The first issue is whether petitioners may exclude the costs of
lodging provided by their employer from income under section 119.
We hold that they may not. The second issue is whether Mr. and
Mrs. Hargrove and Mr. and Mrs. Breeding are entitled to exclude
certain allowances under section 912. We hold that they are not.
The third issue is whether Mr. and Mrs. Hargrove and Mr. and Mrs.
Breeding are liable for accuracy-related penalties under section
6662(a). We hold that they are.
Background
These cases were submitted fully stipulated pursuant to Rule
122, and the facts are so found. The stipulations of facts and
the accompanying exhibits are incorporated by this reference.
All petitioners resided outside the United States at the times
they filed their petitions.
One or both petitioners in each case were employees of TRW
Overseas Inc. (TRW) during the relevant years. These petitioners
worked for TRW in Pine Gap, Australia, at the Joint Defense Space
Research Facility/Joint Defense Space Communication Station (the
4Respondent concedes that Mr. and Mrs. Nakagawa are not
liable for accuracy-related penalties under sec. 6662(a).
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