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Deductions, and on their Schedule C, Profit or Loss From
Business.
By letter dated September 14, 2004, respondent sent to
petitioners a letter of proposed deficiency (30-day letter),
along with an examination report. The 30-day letter notified
petitioners that they had a right to request a conference with an
Appeals officer if they did not agree with the changes shown on
the examination report.
By letter dated September 27, 2004, TCO Harris informed
petitioners that he was reluctant to issue a statutory notice of
deficiency without a reply to the proposed changes from
petitioners. He offered petitioners an opportunity to discuss
the proposed adjustments in the examination report. TCO Harris
also stated in the letter that he would recommend the issuance of
a notice of deficiency if petitioners failed to respond.
By a notice of deficiency dated January 4, 2005, respondent
determined for 2002 a deficiency in petitioners’ Federal income
tax of $14,220 and a section 6662(a) accuracy-related penalty of
$2,844. The notice also asserted computational adjustments for
tuition and fees, self-employment adjusted gross income, self-
employment deduction, and an additional tax for early withdrawal
from an individual retirement account.
In early January of 2005, petitioners retained a C.P.A.,
Martin A. Kapp (Mr. Kapp), to file a petition with the Court and
to assist them in negotiating with respondent.
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Last modified: May 25, 2011