Edward T. And Isabel J. Lysek v. Commissioner of Internal Revenue

This is an appeal by Edward T. Lysek and Isabel J. Lysek (taxpayers) from an order and decision of the Tax Court that there are deficiencies in income tax due from taxpayers as well as additions to tax due for the years 1964, 1965, and 1966. After exhaustion of preliminary procedures, the matter was tried by the Tax Court following which that court entered its memorandum findings of fact and opinion, reported at T.C.M. (P.H.) K 75,293 (1975). A timely notice of appeal was filed and the matter is before us pursuant to section 7482 of the Internal Revenue Code of 1954.

Taxpayer Edward T. Lysek is a medical doctor and surgeon who practiced in Fort Bragg, Mendocino County, California, during the years at issue, and taxpayer Isabel J. Lysek is Dr. Lysek’s wife. The Commissioner determined that taxpayers’ returns for 1964, 1965, and 1966 did not correctly reflect income because certain deductions were overstated, business expenses claimed were unsubstantiated, and depreciation for buildings and improvements was excessive. The Commissioner further determined that the underpayment of tax resulted from taxpayers’ negligence or intentional disregard of rules and regulations and upon that…