- 52 -
respondent's determinations imposing the accuracy-related penalty
on the portion of the underpayment for each such year that is
attributable to such deductions.
Petitioner's Claimed Deductions
of SEP Contributions
For each of the years 1989 and 1991, petitioner underpaid
his income tax as a result of the deductions that he claimed
(viz., $20,000 and $7,977, respectively) and that respondent
disallowed with respect to his SEP contribution for each such
year.35 For 1989, the underpayment of income tax attributable to
petitioner's disallowed SEP deduction resulted from the following
errors: (1) Including the gain from the sale of the drawing in
question in Schedule C of petitioner's return and thus including
that gain in petitioner's self-employment income;36 (2) calculat-
ing petitioner's self-employment income by aggregating the
results of only those Schedules C of petitioner's return that
showed net profits, and not those that showed losses; and
(3) claiming a deduction for petitioner's contribution to the SEP
35 We note that, because respondent made determinations in the
notice that increased petitioner's self-employment income for
1990, respondent determined that petitioner is entitled to a SEP
deduction for that year in an amount in excess of the SEP de-
duction claimed in petitioner's 1990 return.
36 If the $99,000 net profit from the sale of the drawing in
question had not been reported in Schedule C of petitioner's 1989
return relating to art sales, that return would have reflected an
aggregate loss of $39,928 from petitioner's various Schedules C,
and, based on that return, petitioner would not have been enti-
tled to a deduction for any portion of the $20,000 contribution
that he made to the SEP for that year.
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