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issue). For 1999, respondent determined a $650,411 deficiency
and a $130,082 accuracy-related penalty. For 2000, respondent
determined a $1,013,341 deficiency and a $202,668 accuracy-
related penalty. For 2001, respondent determined a $1,240,280
deficiency and a $247,936 accuracy-related penalty.
The parties have resolved all issues regarding the
substantial deficiencies, and petitioners have conceded that
respondent has met his burden of producing evidence that
petitioners substantially understated their income tax for each
of the years at issue. The sole issue for decision is whether
petitioners had reasonable cause for, and acted in good faith
with respect to, their understatements of income tax for the
years at issue. We find that they did not.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the accompanying exhibits are
incorporated by this reference. Petitioners resided in Byron,
California, at the time they filed the petition.
Ronald A. Lehrer (petitioner) has a high school education
and has never taken any business or tax courses. He formed
Lehrer & Sons Construction Co. (the construction business) as a
sole proprietorship around 1995, soon after becoming a licensed
1(...continued)
Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
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