- 10 - 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deductions and not as deductions from gross income in arriving at adjusted gross income.4 4 The Revenue Code of 1954 as originally enacted provided-- SEC. 62.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 ofPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011