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The sole issue for decision is whether petitioner is liable
for tax on income which she earned but with respect to which her
employer did not withhold any amount for Federal income taxes.
Petitioner resided in Madison, Wisconsin, on the date the
petition was filed in this case. Respondent issued petitioner a
statutory notice of deficiency for taxable year 1997 in which the
sole adjustment to petitioner’s taxable income was an increase in
gross income of $4,824.
Petitioner reported $10,209 of adjusted gross income on her
1997 Federal income tax return. Supporting documents filed with
the return show that this amount was derived from the following
sources:
Wages from Warman Intl., Inc. $3,354
Wages from Bradley Farms, Inc. 2,943
State unemployment income 3,712
Interest income 200
10,209
Also filed with petitioner’s return was a Form W-2, Wage and Tax
Statement, from R.Z. & Company, Inc. showing that petitioner
earned an additional $4,825 in income during 1997 but that no
Federal income tax was withheld from this amount. Petitioner
does not dispute either the fact that she earned this income,
which was paid directly by her employer to her landlord as rent,
or the fact that her employer did not withhold for Federal income
taxes. Indeed, petitioner reported $4,825 on her return as
“rents” under “nontaxable earned income.” In this Court,
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Last modified: May 25, 2011