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section 6651(a)(2) of $964,823, and under section 6654(a) of
$206,144.1
After concessions,2 the issues for decision are: (1)
Whether respondent violated petitioner’s due process rights when
he failed to provide petitioner or his representative a notice of
bypass pursuant to section 601.506(b)(1), Statement of Procedural
Rules, and a 30-day letter pursuant to section 601.105(d)(1),
Statement of Procedural Rules; (2) whether respondent’s use of
the bank deposits method to reconstruct petitioner’s income for
the years at issue was arbitrary and unreasonable; (3) whether a
Service Center’s closing notice for 2001 was a closing agreement
within the meaning of section 7121; (4) whether respondent’s
examination of petitioner’s 2001 tax year violated section
7605(b); (5) whether petitioner substantiated Schedule C, Profit
or Loss From Business, costs of goods sold or deductions for the
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and Rule references are to
the Tax Court Rules of Practice and Procedure. Amounts are
rounded to the nearest dollar.
2 Respondent concedes that petitioner’s Schedule C, Profit
or Loss From Business, gross receipts for 2000 were $9,009,882.
Respondent concedes petitioner properly reported his 2001
Schedule C gross receipts of $4,196,750.
Respondent concedes that because petitioner’s extension for
filing for 2001 was sought and granted, petitioner is liable for
a 15-percent addition to tax under sec. 6651(a)(1) for 2001
instead of the 25-percent addition proposed in the notice of
deficiency.
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Last modified: November 10, 2007