Karl L. Matthies and Deborah Matthies v. Commissioner

Thornton, Judge:

For each of petitioners’ taxable years 2000 and 2001, respondent determined a $294,925 deficiency and a $58,985 accuracy-related penalty for negligence under section 6662(a). After concessions, the issues for decision are: (1) Whether in 2000 petitioners realized $1,053,304 of taxable income from a bargain sale to Karl L. Matthies (petitioner) of a life insurance policy by a profit-sharing plan created for petitioners’ wholly owned S corporation; and (2) whether for 2000 petitioners are liable for the section 6662(a) accuracy-related penalty for negligence.

FINDINGS OF FACT

When…