- 7 - ultimately concluded that petitioner and Hood each received $350,000. Petitioners filed joint Federal income tax returns relating to 1994 through 1997, but failed to include income payments relating to rent and supplies from the charities. In 1999, petitioners filed amended returns relating to 1994 through 1997 to reflect the receipt of such income. On April 7, 2003, respondent issued petitioners a notice of deficiency and determined deficiencies and penalties relating to 1994 through 1997 as follows: Year Deficiency Section 6663(a) penalty 1994 $38,853 $29,140 1995 35,639 29,289 1996 22,047 21,020 1997 25,863 19,397 Respondent based his determinations on Hood’s assertions, information received from various members of the respective charities, and Agent Gannaway’s reconstruction of petitioners’ income. Petitioners resided in Kingsport, Tennessee, at the time they filed their petition with the Court. OPINION In order for petitioners to be liable for the fraud penalty, an underpayment must exist. Parks v. Commissioner, 94 T.C. 654, 660-661 (1990). Respondent determined, pursuant to Agent Gannaway’s report, that petitioners failed to report incomePage: Previous 1 2 3 4 5 6 7 8 9 10 Next
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