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In 1996 and 1997, the insurers paid $9,719 and $9,631,
respectively, to the credit card companies on Hong’s behalf.
For 1996 and 1997, petitioner prepared her and Hong’s joint
Federal income tax returns. On their tax returns, petitioner and
Hong, apparently under the impression that these amounts did not
constitute taxable income, did not report the above insurance
payments that had been made on Hong’s behalf.
Upon audit for 1996 and 1997, respondent determined that the
insurance payments constituted taxable income. In connection
with respondent’s audit, Hong explained to petitioner that
respondent’s adjustments were related to the taxability of the
insurance payments made on his behalf.
On December 15, 1998, and October 13, 1999, respectively,
respondent’s notices of deficiency relating to petitioner and
Hong’s 1996 and 1997 joint Federal income tax returns were mailed
to petitioner and Hong.
With regard to the notice of deficiency for each year,
petitioner and Hong jointly filed petitions with the Tax Court to
redetermine the deficiencies, and petitioner read and signed both
petitions. The two cases were consolidated for trial.
Prior to the trial, petitioner and Hong attended meetings
with respondent’s Appeals Office and meetings with counsel for
respondent. Petitioner spoke and participated in these meetings,
and petitioner signed various documents including a stipulation
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Last modified: May 25, 2011