Walter and Susan Moore - Page 35




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          decline to sustain respondent’s determination that petitioners              
          are liable for an accuracy-related penalty for substantial                  
          understatement of income tax.  Accord Montgomery v. Commissioner,           
          127 T.C. 43, 67 (2002); Racine v. Commissioner, T.C. Memo. 2006-            
          162; Facq v. Commissioner, T.C. Memo. 2006-111.                             
          E.  Holdings                                                                
               We hold that petitioner realized income in 2002 when she               
          exercised her stock options received from CTI.  We also hold that           
          petitioners are not liable for the accuracy-related penalty                 
          determined by respondent under section 6662(a) and (b)(2).  We              
          have considered all arguments made by petitioners for a contrary            
          holding as to the deficiency, and we have considered all                    
          arguments made by respondent for a contrary holding as to the               
          accuracy-related penalty.  As to the arguments that we have                 
          considered but not discussed herein, we have rejected those                 
          arguments as without merit.                                                 
                                                  Decision will be entered            
                                             for respondent as to the                 
                                             deficiency; decision will be             
                                             entered for petitioners as to            
                                             the accuracy-related penalty.            












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