Respondent determined deficiencies in petitioners' Federal
income taxes for the taxable years 1988, 1989, and 1990, as well
as an addition to tax and a penalty for negligence, as follows:
Addition to Tax Penalty
Year Deficiency Sec. 6653(a)(1) Sec. 6662(a)
1988 $5,303 $265 ---
1989 2,788 --- $558
1990 2,965 --- 593
In addition to the foregoing, respondent asserted, in her
answer, an addition to tax for 1990 in the amount of $741 under
section 6651(a)(1) for failure to file a timely Federal income
tax return.
After concessions by the parties,2 the issues for decision
are as follows:
(1) Whether petitioners are liable for self-employment tax
for the taxable years 1988, 1989, and 1990;
(2) whether petitioners are entitled to net operating loss
deductions for the taxable years 1988, 1989, and 1990;
1(...continued)
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
2 Petitioners concede that they are not entitled to deduct
cable and news expenses for the taxable year 1990. For the
taxable years 1988 and 1989, respondent concedes that, if
petitioners do not prove that they are entitled to deduct
mortgage interest on Schedule C, then mortgage interest is
deductible as an itemized deduction on Schedule A.
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