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6651(a)(1)1 of $205,028.25 and $592.50, respectively, for 1997
and 1999. After concessions,2 the issues for decision are:
(1) Whether respondent bears the burden of proof under
section 7491(a). We hold that respondent does not;
(2) whether petitioner Joseph Dunne was a shareholder of
FRC International, Inc. (FRC), in 1997 and whether petitioners
must pay income tax on FRC’s income under section 1366. We hold
that Mr. Dunne ceased to be a shareholder of FRC on May 8, 1997,
and therefore under section 1377(a)(1) petitioners are liable for
paying income tax only on Mr. Dunne’s pro rata share of FRC’s
income on the basis of the number of days in 1997 that he owned
the stock;
(3) whether Mrs. Dunne is eligible for relief from joint
liability under section 6015 for 1997. We hold that she is not;
(4) whether petitioners may claim as trade or business
expenses $20,000 of legal expenses that they incurred in 1999.
We hold that they may not, but they may claim the $20,000 as
miscellaneous itemized expenses;
1 All section references are to the Internal Revenue Code
(the Code) in effect for the years in issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
2 Petitioners concede that the statute of limitations does
not bar the assessment or collection of any amount due for 1997
or 1999. Petitioners also concede that petitioner Elizabeth
Dunne does not qualify for innocent spouse relief under sec. 6015
for 1999.
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