-4-
Following termination as president of Cal-American, petitioner
provided consulting services to Arrowhead General Insurance Agency
(Arrowhead). Arrowhead issued petitioner a 1989 Form W-2,
reflecting $74,503.25 in wages and $8,041 in Federal and $3,956.31
in State income taxes withheld.
Individual Retirement Account
In February 1989, an individual retirement account, account
No. 063-19555-6, was established on petitioner’s behalf at Security
Pacific National Bank. The account was classified as a “SEP”, and
Cal-American was the named employer. Petitioner deposited $11,250
into the account at that time. Petitioners claim that petitioner
received the $11,250 from Westech, in addition to his wage and
severance payments. Petitioners did not include the $11,250 in
income for 1989.
On their 1989 tax return, petitioners claimed a $23,822.36
deduction for payments made to a “self-employed SEP”, which
respondent disallowed. The record does not indicate how
petitioners determined the $23,822.36.
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