- 21 -
cattle activity.15
With respect to the $20,000 contribution that petitioner
made to the SEP for 1989, petitioner informed Mr. McVeigh in
April 1990 that he had established a retirement plan to which he
timely contributed $20,000 and related the conversations that he
had had with the individual who had assisted him in establishing
that plan. Mr. McVeigh advised petitioner that the deductible
amount of that contribution was limited to a percentage not to
exceed 25 percent of petitioner's self-employment income and that
that percentage varied depending on the nature of the retirement
plan. Based on the information that petitioner gave Mr. McVeigh
about, inter alia, the retirement plan that he had established
and the sale of the drawing in question, Mr. McVeigh advised
petitioner that he was entitled to deduct for 1989 his $20,000
contribution to that plan to the extent of 25 percent of his
self-employment income for that year.16 Mr. McVeigh further
advised petitioner that, in calculating his self-employment
income for 1989 for purposes of determining the deductible
portion of his $20,000 retirement plan contribution, he should
take into account only the Schedules C of his 1989 return that
15 The record does not disclose the expenses that petitioner
incurred during the years 1990, 1992, 1993, and 1994 in connec-
tion with his cattle activity.
16 At trial, the parties agreed that any deduction to which
petitioner may be entitled for each of the years 1989, 1990, and
1991 for contributions that he made to the SEP for each of those
years is limited by sec. 404(h)(1)(C) to 15 percent, and not 25
percent, of his self-employment income for each such year.
Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 NextLast modified: May 25, 2011