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All section references are to the Internal Revenue Code in
effect for the taxable years in issue, and all Rule references
are to the Tax Court Rules of Practice and Procedure, unless
otherwise indicated. References to petitioner are to Larry
Jackson Beard.
After concessions,1 the issues for decision are: (1)
Whether petitioners had unreported income during 1991 and 1992.
We hold they did to the extent set out below. (2) Whether for
1992 petitioners are entitled to a claimed dependency exemption
for their daughter Jacqueline. We hold they are not. (3)
Whether for 1991 and 1992 petitioners are liable for self-
employment taxes pursuant to section 1401. We hold they are.
(4) Whether for 1991 and 1992 petitioners are liable for fraud
penalties pursuant to section 6663, or in the alternative, the
accuracy-related penalties pursuant to section 6662. We hold
they are not liable for the fraud penalties but are liable for
the accuracy-related penalties.
Certain automatic adjustments will be required in the
calculation of self-employment taxes, earned income credit
claimed for 1992, and related items of a computational nature
1 Respondent concedes that deposits made Jan. 24, 1991,
Jan. 16, 1992, Apr. 10, 1992, and July 14, 1992, of $22.16, $250,
$1,000, and $600, respectively, are nontaxable. Respondent
further concedes that the notice of deficiency incorrectly added
$2,100 of cash expenditures for 1991 and failed to give
petitioners credit for $1,250 of income reported on their return
for 1992.
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