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that petitioner had unreported income in the amount of $26,987.
On November 26, 1996, respondent issued a statutory notice of
deficiency. Ms. Dickerson's report reconstructing petitioner's
income was attached. The notice of deficiency listed the
following adjustments to petitioner's income: (1) $44,471
increase in Schedule C net profit resulting from the $26,987 of
unreported income determined by Ms. Dickerson's reconstruction
of petitioner's income and the disallowance for lack of
substantiation of $17,484 in deductions for Schedule C business
expenses; (2) $2,350 increase of "other income", representing
petitioner's gain on the truck sale; and (3) $6,166 increase in
rent income, resulting from petitioner's $2,800 computational
error plus $3,366 of expenses disallowed for lack of
substantiation.
Following pretrial discovery, respondent made several
adjustments to Ms. Dickerson's reconstruction of petitioner's
income and recomputed petitioner's unreported income. Respondent
determined that petitioner had unreported income of $25,648,
$1,339 less than the unreported income originally determined by
Ms. Dickerson and set forth in the statutory notice of
deficiency.
The following table sets forth Ms. Dickerson's initial
reconstruction of petitioner's unreported Schedule C income and
respondent's reconstruction and revised computation:
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