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J. Peeples Trust and $3,212 from their J. Masters note. Thus,
petitioners received a total of $17,952 interest income in 1990.
On their 1990 Federal income tax return, petitioners
reported $15,1282 interest income, consisting of $345 from
Sunburst Bank, $172 from Planters Bank & Trust Co., $11,339 from
J. Peeples Trust, and $3,212 from their J. Masters note.
In the notice of deficiency, respondent increased
petitioners' income by $2,824, stating that they received
interest income of $17,952 in the taxable year 1990, rather than
$15,128 as reported on their 1990 return.
Self-Employment Taxes
Petitioners reported self-employment tax on their Federal
income tax returns for 1990 and 1991 in the amounts of $7,848.90
and $10,246.60, respectively. They claimed Schedule C deductions
for self-employment tax on the returns in the amounts of
$7,848.90 and $10,246.60, respectively.
Through adjustments made to petitioners' 1990 and 1991
returns at the Memphis Service Center, petitioners were allowed
to deduct one-half of the self-employment tax reported by them on
their 1990 and 1991 returns.
2 Petitioners erroneously calculated the $15,128 interest
income reported on their Federal income tax return for the
taxable year 1990. The individual items of interest income
detailed by petitioners on Schedule B attached to their 1990
return total $15,068, which is $60 less than $15,128. Thus, in
the notice of deficiency respondent determined that petitioners
failed to report interest income in the amount of $2,824, which
is $60 less than the amount of interest income petitioners failed
to disclose on Schedule B attached to their 1990 return.
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