Thomas B. Drummond - Page 22

                                       - 22 -                                         
          showed net profits (viz., $99,000 net profit from art sales and             
          $7,372 net profit from Psychological Testing Services), and not             
          the Schedules C that showed losses (viz., $2,925 loss from                  
          commodities and other investments and $44,375 loss from New Life            
          Center).  Consequently, petitioner deducted in his 1989 return              
          the entire $20,000 that he contributed to the SEP.  That deduc-             
          tion exceeded (by $5,075) 25 percent of the aggregate amount                
          (viz., $59,702) of the results shown in the various Schedules C             
          of that return that petitioner reported as his "Business income"            
          (business income) on page 1, line 12 of that return.                        
               With respect to the $30,000 contribution that petitioner               
          made to the SEP for 1990, petitioner deducted $16,912 in his                
          return for that year.  That deduction equaled 25 percent of the             
          aggregate amount (viz., $67,648) of the results shown in the                
          various Schedules C of that return that petitioner reported as              
          his business income for 1990.  With respect to the $26,000                  
          contribution that petitioner made to the SEP for 1991, petitioner           
          deducted that entire amount in his return for that year.  That              
          deduction equaled 24.91 percent of the amount (viz., $104,371)              
          shown in Schedule C of that return that petitioner reported as              
          his business income for 1991.                                               
               At the time that Mr. McVeigh prepared petitioner's returns             
          for the years at issue, Mr. McVeigh did not know of any adverse             
          tax consequences that might result if petitioner's retirement               
          plan contribution for each such year exceeded the amount allow-             





Page:  Previous  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  Next

Last modified: May 25, 2011