- 9 - self-employment taxes was a normal or usual incident of his business, as was the case in Commissioner v. Polk, supra. Past cases have required a stronger connection between the adjustments creating the deficiency and the taxpayer's business. See Polk v. Commissioner, 31 T.C. 412 (1958) (holding that adjustment arising from revaluations of taxpayer's inventory was sufficiently connected and proximately related to taxpayer's business); Standing v. Commissioner, 28 T.C. 789 (1957) (holding that adjustment arising from accounting errors in taxpayer's business was proximately related to taxpayer's business), affd. 259 F.2d 450 (4th Cir. 1958). Therefore, we find that no part of the deficiencies arising because of petitioner's failure to pay self-employment taxes during the 1981 and 1982 taxable years was attributable to petitioner's trade or business. Overstated Withholding by Petitioner Petitioners claimed on their 1981 and 1982 Federal income tax returns credits for withholding in the amounts of $11,060.84 and $12,601.25, respectively. These amounts were never in fact withheld or paid over to the Service. A portion of the interest expense deducted by petitioners on their 1991 Federal income tax return represents interest on the unpaid tax liabilities arising from the overstatement of credits for withholding. That interest was paid during the taxable year 1991. Petitioners have failed to prove that the interest paid on the tax liabilities resulting from their overstated withholdingPage: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
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