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1991 and $77,727 for 1992. For both years in issue, no Federal
income tax was withheld, as reflected on the Forms W-2 issued for
Mrs. Whalley by the Hayward Police Department.
For 1991 and 1992, petitioners claimed total itemized
deductions on Schedule A of $28,211 and $34,148, respectively.
They deducted $5,283 in 1991, and $7,242 in 1992 for continuing
education courses, professional meetings, and conferences. For
1992, they deducted $2,066 for union and professional dues and
$2,024 for the cost of purchasing and cleaning Mrs. Whalley's
uniforms. A list of the Schedule A miscellaneous deductions is
attached as appendix A.
For 1991 and 1992, petitioners filed Schedules C for a
business called Twin Star Investigations (TSI). The Schedules C
reflect gross income of $4,524 and expenses of $25,546, for 1991,
and gross income of $4,892 and expenses of $32,616, for 1992. A
list of the Schedule C deductions is attached as appendix B.
TSI was operated solely by petitioner for approximately 8
years, from 1984 to 1992. Petitioner billed clients for
approximately 181 hours in 1991 and 163 hours in 1992. His rate
for investigative work ranged from $25 to $35 per hour. His rate
for office work and travel time was $15 per hour. In 1991, he
billed clients for mileage at 35 cents per mile and also charged
them for lodging, meals, equipment, supplies, photographs, and
fees paid. Petitioner's cellular telephone, purportedly used in
connection with his business, was not listed under TSI.
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