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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 withholding
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