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After a concession by respondent, the issues for decision
are: (1) Whether petitioners failed to report miscellaneous
income of $3,341 received from the Shaklee Corp. (the
corporation) in 1990, and (2) whether petitioners are entitled to
trade or business deductions under section 162 for cost of goods
sold.2
Some of the facts were stipulated, and those facts, with the
annexed exhibits, are so found and are incorporated herein by
reference. At the time the petition was filed, petitioners'
legal residence was Memphis, Tennessee.
During 1990, Charles G. Vick (petitioner) was self-employed
selling the products of the corporation. Petitioners received
$3,341 from the corporation during 1990, and that amount was
reported by the corporation as a payer to the Internal Revenue
Service (IRS) on IRS Form 1099 as Miscellaneous Income. On
Schedule C of petitioners' 1990 Federal income tax return,
petitioners did not report the $3,341 received from the
corporation. Petitioners reported gross receipts of $1,150 and,
from this amount, deducted $30,650 as cost of goods sold. The
amount of the cost of goods sold was shown on Part III of
Schedule C of petitioners' return as follows:
2
At trial, respondent conceded that, for 1990, petitioners
are entitled, under sec. 63(f)(1), to the standard deduction
amount for joint filers where both spouses are age 65 or older,
rather than the basic standard deduction for joint filers.
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Last modified: May 25, 2011