- 7 -
doubt as to any liability". The Form 656 proposed a reduction in
petitioners' Federal income tax deficiencies for 1985, 1986, and
1987 in the amounts of $870, $2,987, and $4,104, respectively.7
Revenue Agent Kim Lovell was assigned to review petitioners'
Form 656. In a telephone conference on May 7, 1992, Revenue
Agent Lovell informed Mr. Conner that petitioners needed to
present additional information if their case was to be closed.
On May 11, 1992, Revenue Agent Lovell and Mr. Conner met to
review additional documentation and to determine the extent of
any adjustments to petitioners' Federal income tax liabilities
for 1985, 1986, or 1987. In a Form 4549, which was proposed by
Revenue Agent Lovell and dated July 29, 1992, she determined that
petitioners were entitled to additional Schedule C deductions for
1985 and 1987 in the amounts of $430 and $621, respectively.8
This resulted in a reduction of petitioners' Federal income taxes
for 1985, 1986, and 1987 in the amounts of $123, $2,9 and $166,
respectively. Revenue Agent Lovell prepared a rejection
7These amounts were the same as the reductions in Federal
income tax liability listed by petitioners on their amended
returns.
8Revenue Agent Lovell increased petitioners' Schedule C
deduction in 1985 by $430 to reflect petitioners' payment of a
highway use tax. For 1987, Revenue Agent Lovell increased
petitioners' Schedule C deductions for car/truck expenses, travel
and entertainment expenses, and uniforms in the amounts of $127,
$56, and $438, respectively.
9This $2 reduction in petitioners' Federal income tax
liability for 1986 resulted from respondent's determination that
petitioners were entitled to use income averaging in computing
their tax liability for that year.
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