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corresponding gambling losses of $17,204 in 1999. Mrs. Lenzen’s
occupation was listed as “homemaker” on the Lenzens’ 1999 income
tax return. Mrs. Lenzen did not receive a Form 1099-MISC or Form
W-2, Wage and Tax Statement, from RAF and was not on RAF’s
payroll in 1999.
On February 12, 2003, respondent issued a notice of
deficiency to the Lenzens with respect to 1999. Respondent
determined that Mr. Lenzen received constructive dividends from
RAF in the full amount of the disallowed sales expense deduction,
$100,793. Respondent has conceded that all but $47,674 was not
constructive dividend income to the Lenzens. Respondent also
determined, and the parties stipulated, that the Lenzens received
$13,619 in gambling income in 1999 in addition to the $17,204 of
gambling income reported on their return. Respondent did not
disallow the Lenzens’ claimed $17,204 gambling loss.
Steven Lenzen and David Lenzen each filed individual tax
returns for 1999; neither was a dependent of the Lenzens in 1999.
Additionally, neither of their 1999 returns reflected receipt of
dividend income. Respondent did not issue a notice of deficiency
to either Steven Lenzen or David Lenzen for 1999.
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Last modified: May 25, 2011