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1040) for 1990 and 1991, and both petitioners signed these Forms
1040 and dated them October 19, 1992. Petitioner was uncertain
of the proper treatment of his earnings reported on the Forms W-2
as compared to the nonemployee compensation reported on the Forms
1099, but he believed that any questions would be resolved during
the meeting.
On or about October 19, 1992, petitioner met with an IRS
representative in response to the IRS letter; petitioner's wife
did not attend the meeting. The IRS representative had computer
printouts of IRS records. She revised some of petitioner's
figures and wrote in others.
For 1990, the IRS representative revised Line 7 wages of
$144,707.23 to zero, not including any Form W-2 income. She
prepared or completed two Schedules C to compute Line 12 business
income. On one Schedule C she listed the $60,263.40 W-2 wage
income and no expenses; on the other Schedule C that petitioner
had partially filled out, the Forms 1099 nonemployee compensation
was listed as gross receipts of $83,173.97. For 1991, she
entered the Form W-2 income in Line 7 and used petitioner's
Schedule C expenses to compute Line 12 business income. The IRS
representative completed Schedules SE Self-Employment Tax for
both 1990 and 1991.
The following charts summarize selected information from the
Forms W-2 and 1099 attached to the returns, the returns as
partially filled out by petitioner (original returns), and as
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