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Penalty
Year Deficiency I.R.C. Sec. 6663
1998 $43,020 $32,265.00
1999 42,510 30,672.75
2000 49,029 36,771.75
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
After concessions by the parties, the sole issue for
decision is whether petitioners’ underpayments of taxes for the
years in issue were due to fraud and subject to the civil fraud
penalty under section 6663 or, in the alternative, whether
petitioners are liable for the accuracy-related penalty pursuant
to section 6662 for substantial understatements in their Federal
tax liability for the years in issue.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference.
Petitioners resided in Vacaville, California, at the time that
they filed their petition.
Petitioners operated a residential painting business known
as Custom Painting during 1998, 1999, and 2000. In early 2000,
petitioners began an additional business known as TC’s Discount
Parts, in which they sold motorcycle accessories.
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Last modified: May 25, 2011