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Year Deficiency I.R.C. sec. 6662
2002 $58,816 $11,763.20
2003 95,217 19,043.40
2004 87,442 17,488.40
Unless otherwise indicated, all section references are to the
Internal Revenue Code in effect for the years in issue.
After concessions by the parties, the sole issue for
decision is whether petitioners are liable for the accuracy-
related penalties determined by respondent pursuant to section
6662 for substantial understatements of 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 California at the time they filed their
petition. For purposes of trial only, this case was consolidated
with a related worker classification case at docket No. 12139-06.
The amounts of total tax liability that petitioners reported
on their income tax returns for the years in issue and the
deficiencies determined by respondent, which amounts include
disallowed credits, for those years are as follows:
Year Tax on return Corrected tax Understatement
2002 $4,499 $61,219* $58,816
2003 5,769 100,326* 95,217
2004 11,566 99,008 87,442
* Includes credits disallowed by respondent for this year.
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Last modified: March 27, 2008