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Respondent determined a deficiency in petitioners' 1991
Federal income tax in the amount of $5,018 and an accuracy-
related penalty under section 6662(a) in the amount of $1,004.
The issues for decision are: (1) Whether petitioners are
entitled to deduct for the year 1991, Schedule C expenses
totaling $27,720;2 and (2) whether petitioners are liable for the
accuracy-related penalty under section 6662 due to negligence or
disregard of rules or regulations.
Some of the facts have been stipulated and are so found.
The Stipulation of Facts and the exhibits attached thereto are
incorporated herein by reference.
Petitioners resided in Redwood City, California, at the time
the Petition was filed. Petitioners filed a joint individual
income tax return, Form 1040, for the year 1991. Attached to the
return is a Schedule C for "Edmiston Enterprises" listing total
business expenses of $27,720.
Petitioner, Melinda S. Edmiston did not appear at trial and
did not sign the stipulation of facts in this case. Respondent
orally moved to dismiss her for failure to properly prosecute her
case. Respondent's motion will be granted.
2Petitioners' entitlement to the "Earned Income" credit
under sec. 32 as well as their liability for the tax on self-
employment income under secs. 1401-1403 and their entitlement to
the deduction under sec. 164(f) of one-half the amount, if any,
of any self-employment tax imposed, is dependent upon our
resolution of this issue.
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Last modified: May 25, 2011