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concessions,2 the issue left for decision is whether petitioner is
liable for an accuracy-related penalty under section 6662(a) with
respect to the understatement of tax on his 2001 Federal income
tax return. We hold that petitioner had reasonable cause and
acted in good faith with respect to the associated underpayment
and is therefore not liable for an accuracy-related penalty.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time the petition
was filed, petitioner resided in Pacific Grove, California.
Petitioner was the sole shareholder of Windsor Capital
Mortgage Corp. (Windsor), which was engaged in real estate credit
activities, from its incorporation in 1989 through 2001.
Petitioner was employed full time as president of Windsor during
2001. Petitioner elected for Windsor to be taxed under the
provisions of subchapter S of chapter 1, subtitle A, of the
Internal Revenue Code, effective July 1, 1998, and the election
was in effect through 2001.
2 Petitioner concedes that he failed to report $173,093 of
ordinary income in 2001. Respondent concedes that petitioner did
not have an additional $27,840 of income determined for that
year, as had been reported to respondent on an erroneous Form W-
2, Wage and Tax Statement, issued to petitioner.
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