Robert P. Noli and Delora J. Noli v. Commissioner of Internal Revenue

Robert P. and Delora J. Noli appeal from a decision of the United States Tax Court dismissing their petition for redetermination of deficiencies in their income tax for the tax years 1974 through 1978. Petitioners raise a number of issues, both procedural and substantive in nature. We affirm.

I.

In the mid-1960’s, petitioner Robert Noli established a chiropractic practice in Merced, California. With the assistance of his wife, the practice was operated as a sole proprietorship until late 1973. In September or October of 1973, Robert Noli, aided by a tax return preparer, formed two wholly-owned Nevada corporations, Robco and Deeco. Mr. Noli’s chiropractic practice and its good will were transferred to Rob-co, Inc. in exchange for 100 percent of its stock. Mr. and Mrs. Noli’s personal residence, real property, automobiles, and office equipment related to the chiropractic practice were transferred to Deeco, Inc. in exchange for 100 percent of its stock. In the taxable years 1974, 1975, 1976, 1977 and 1978, the Nolis and the two corporations received gross income of approximately $1,117,740.00. In the five tax years in question, Mr. and Mrs. Noli reported on their joint federal tax…