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During their marriage, the Womacks used a tax return
preparer to complete their returns. Petitioner and Mr. Womack
filed joint Federal income tax returns for 1989 and 1990; those
returns were prepared by Robert C. Wade, an accountant. The
returns as filed reflect, among others, the following pertinent
items:
Item 1989 1990
Form 1040:
Wages $12,803 $18,471
Business income (loss) (7,118) (735)
Adjusted gross income 5,736 18,353
Child care credit --- ---
Self-employment tax 0 0
Total tax on return 0 0
Earned income credit 796 ---
Schedule A:1
Medical expenses --- 4,276
Mortgage interest 9,048 7,541
Personal interest paid 2,356 769
Charitable contributions 500 1,200
1 These amounts reflect the amounts reported as paid, not
necessarily the amounts taken as deductions.
The Schedules C attached to the Womacks' 1989 and 1990 tax
returns reflect the following items:
Item 1989 1990
Gross receipts or sales $33,774 $220,582
Cost of goods sold 19,613 126,539
Gross income 14,161 94,043
Expenses (including 21,279 94,778
depreciation)
Net profit (loss) ($7,118) ($735)
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Last modified: May 25, 2011