Kathleen A. Brown - Page 10

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          Zibilich v. Commissioner, T.C. Memo. 1972-92; and Chippi v.                 
          Commissioner, T.C. Memo. 1971-236.                                          
               In Chippi v. Commissioner, T.C. Memo. 1971-236, we found               
          that the tip income of certain waiters should be reduced by 20              
          percent for tips to busboys.                                                
               These cases do not specifically state whether the taxpayer             
          used the standard deduction or itemized deductions.  No such                
          statement was necessary, since the reduction was in the gross               
          income required to be reported and, therefore, would not affect             
          itemized deductions or the taking of the standard deduction.                
               The law with respect to expenses that an employee may deduct           
          from gross income to arrive at adjusted gross income has not                
          changed since 1954 in a way to affect the issue here.  Since the            
          enactment of the 1954 Revenue Code, an employee has been entitled           
          to claim business expense deductions, except those in specified             
          categories, only as itemized deductions and not as deductions               
          from gross income in arriving at adjusted gross income.4                    

          4  The Revenue Code of 1954 as originally enacted provided--                
               SEC. 62.  ADJUSTED GROSS INCOME DEFINED.                               
                    For purposes of this subtitle, the term "adjusted gross           
               income" means, in the case of an individual, gross income              
               minus the following deductions:                                        
                         (1) Trade and business deductions.--The deductions           
                    allowed by this chapter (other than by part VII of this           
                    subchapter) which are attributable to a trade or                  
                    business carried on by the taxpayer, if such trade or             
                    business does not consist of the performance of                   




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