Thomas B. Drummond - Page 21

                                       - 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  Next

Last modified: May 25, 2011