Joel Rappaport - Page 2

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          amount of $5,096.25; (2) for failure to pay tax under section               
          6651(a)(2) in the amount of $1,812; and (3) for failure to pay              
          estimated tax under section 6654(a) in the amount of $786.40.               
               Less than a month before trial, petitioner submitted an                
          income tax return for 2001 to respondent in which he reported               
          more income than respondent had determined and deducted expenses            
          that flowed through to his return from two S corporations.                  
          Respondent asserted in an amendment to answer filed 5 days before           
          trial that petitioner’s deficiency for 2001 is $168,424 and that            
          he is liable for additions to tax of $42,106 under section                  
          6651(a)(1) and $2,317 under section 6654(a).                                
               After concessions,2 the issues for decision are:                       
               1.   Whether petitioner may deduct a greater amount of                 
          expenses flowing through to him from his S corporations than                
          respondent allowed.  We hold that he may not.                               
               2.   Whether petitioner is liable for the addition to tax              
          for failure to timely file his 2001 return under section                    
          6651(a)(1).  We hold that he is.                                            
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               

               2  Among other concessions, petitioner concedes he is liable           
          for the addition to tax for failure to pay estimated tax under              
          sec. 6654(a), and respondent concedes that petitioner is not                
          liable for the addition to tax under sec. 6651(a)(2).                       

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