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The issues for decision are: (1) Whether petitioners are
entitled to a claimed $23,822.36 deduction for contributions
allegedly made by or on behalf of petitioner Marcus Ramsey to a
simplified employer pension-individual retirement account plan; (2)
whether petitioners are entitled to deduct business expenses for
1989 in excess of the amounts allowed by respondent; and (3)
whether petitioners are liable for the section 6662(a) accuracy-
related penalty for such year.
Some of the facts have been stipulated and are found
accordingly. The stipulation of facts and attached exhibits are
incorporated herein by this reference.
For convenience and clarity, we have combined our findings of
fact and opinion with respect to each issue. As used herein, the
term “petitioner” refers to Marcus Wayne Ramsey; “petitioners”
collectively refers to Marcus Wayne and Judith Caroline Ramsey.
All section references are to the Internal Revenue Code for the
year in issue, and all Rule references are to the Tax Court Rules
of Practice and Procedure.
General Findings
At the time they filed their petition, petitioners, husband
and wife, resided in Poway, California. They filed a joint Federal
income tax return, Form 1040, for 1989, dated August 14, 1990.
Subsequent to filing the petition in this case, petitioners filed
an amended 1989 return, Form 1040X, dated April 11, 1995, which
respondent accepted. The amended return restated petitioner’s wage
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