Yousef Rouzmehr - Page 2

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          stipulated, the only remaining issue for trial is whether                   
          petitioner is liable for an accuracy-related penalty under                  
          section 6662.  The parties filed a stipulation of settled issues            
          showing that petitioner failed to report a State tax refund of              
          $235; interest income of $736; and net gambling income of                   
          $27,407.  The parties also stipulated agreed adjustments to                 
          Schedule C of petitioner's income tax return as follows:                    
          Description  Per return   Agreed adjustment to return  Agreed total         
          Gross Receipts   $23,960             $80,902               $104,862         
                                                                                    
          Less:  Cost of    25,881              47,143                 73,024         
          Sales                                                                       
          Gross Income      (1,921)             33,759                 31,838         
          Petitioner had deducted Schedule C expenses of $17,237.  The parties agree to
          an adjustment of $6,576, or total Schedule C expenses in the amount of      
          $10,661.  These agreements result in net Schedule C income in the amount of 
          $21,177 (i.e., $31,838-$10,661), as opposed to a loss of $19,158 claimed on 
          the return.  There will also be an automatic adjustment to self-employment  
          tax, which will be computed mathematically.                                 
               Some of the facts have been stipulated and are so found.  The          
          stipulation and attached exhibits are incorporated herein by this reference.
          At the time of filing the petition herein, petitioner resided in San Jose,  
          California.                                                                 
               Petitioner was born May 5, 1957, in Tabriz, Iran.  He attended but did 
          not complete college in the United States and became a permanent resident in
          1984.  Since that time he has been employed as an engineer.                 
               In mid-1988 petitioner started a business called ESTI Memory           
          International (EMI).  Petitioner's father died in 1989; his mother still lives
          in Iran.                                                                    







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