Frederic W. Thrane, Jr. - Page 2

                                        - 2 -                                         
          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.                            




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  Next

Last modified: May 25, 2011