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1993 16,342 --
Unless otherwise indicated, all section references are to the
Internal Revenue Code in effect for the years in issue, and all
Rule references are to the Tax Court Rules of Practice and
Procedure.
After concessions by petitioners, the issues for decision
are as follows:
1. Whether petitioners, pursuant to section 162(a), are
entitled to deduct certain expenses as ordinary and necessary
business expenses. We hold that petitioners are not so entitled.
2. Whether petitioners, pursuant to section 6662(a), are
liable for an accuracy-related penalty. We hold that petitioners
are liable.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. At
the time the petition was filed, petitioners resided in Antioch,
California.
During the years in issue, petitioners operated a day-care
service in their home. In addition to their own children,
petitioners cared for one child in 1992 and four children in
1993. During 1993, petitioners also operated from their home
Simpson & Associates, a business that marketed Amway Corp.
products, and Equity Investments, a business that sold mortgage
reduction plans. During the years in issue, Scott Simpson was
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