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The prepayment credit was erroneously taken into
consideration prior to arriving at the deficiency figure. The
deficiency should have been calculated without taking into
consideration prepayment credits.
The notice of deficiency issued to Yvonne was based upon the
adjustments in the following chart:
Item and Source 1990 1991
One-half of Doyle's wages - IRP $1,200 $500
Interest - IRP 221 370
one-half of Doyle's two
Schedules C net income 4,538 4,728
Schedule C
Yvonne King Real Estate
(1990 IRP income, CPI expenses) 91,663 -0-
(1991 CPI applied to the 1990 figures) 95,513
Rental income - source unknown -0- 8,000
Exemption deduction (2,050) (1,118)
Self-employment tax deduction (3,925) (4,590)
_ _
Mortgage interest deduction -
1990 and 1991 - IRP (5,411) (7,536)
Total adjustments 86,236 97,503*
*Per the deficiency notice.
Income tax 24,389 26,784
Prepayment credit 3,330 -0
Income tax balance 21,059 26,784
Self-employment tax 7,849 9,180
Total tax liability 28,908 35,964
The prepayment credit was erroneously taken into
consideration prior to arriving at the deficiency figure. The
deficiency should have been calculated without taking into
consideration prepayment credits.
For 1990 and 1991, petitioners had income, as reflected in
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