J. Ramsay Farah and Elizabeth Farah - Page 27

          the South Point Road lot.  As they did not own the South Point              
          Road lot, petitioners are not entitled to exclude the gain on its           
          sale under section 121.11  Allied Marine Sys., Inc. v.                      
          Commissioner, T.C. Memo. 1997-101, affd. without published                  
          opinion sub nom. Gibbons v. Commissioner, 155 F.3d 558 (4th Cir.            
          C.   Penalty Under Section 6662(a)                                          
               Section 6662(a) imposes a 20-percent penalty on the portion            
          of an underpayment attributable to negligence or disregard of the           
          rules or regulations.  Although the Commissioner bears the                  
          initial burden of production and must come forward with                     
          sufficient evidence showing it is appropriate to impose an                  
          accuracy-related penalty, the taxpayer bears the burden of proof            
          as to any exception to the penalty.  See sec. 7491(c); Rule                 
          142(a); Higbee v. Commissioner, 116 T.C. 438, 446-447 (2001).  In           
          order to meet the burden of proof, a taxpayer must present                  
          evidence sufficient to persuade the Court that the Commissioner’s           

               11The parties have stipulated that the sale of the South               
          Point Road lot resulted in a gain of $278,962.  In accordance               
          with the partnership agreement, petitioners had a combined 70               
          percent profits interest in the Family Partnership.  Therefore,             
          there is a taxable gain to petitioners of their distributive                
          share of the gain in the amount of $195,273.                                
               As the Family Partnership qualifies under the “small                   
          partnership” exception to the partnership audit and litigation              
          procedures, secs. 6221-6233, respondent was not required to issue           
          a notice of final partnership administrative adjustment to the              
          Family Partnership.  Sec. 6231(a)(1)(B).                                    

Page:  Previous  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  Next 

Last modified: March 27, 2008