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Penalties
Year Deficiency Sec. 6662(a)
1992 $23,257 $4,651
1993 24,762 4,952
The parties have agreed to amounts for the 1992 taxable year, and
the following issues remain in controversy for 1993: (1) Whether
petitioners failed to report $324,851.31 of gross receipts for
1993; (2) whether petitioners' cost of goods sold was $32,453, as
reported, or $290,084 as determined by respondent; (3) whether
petitioners have substantiated entitlement to $5,640 of
deductions claimed on their Schedule C for 1993; (4) whether
petitioners are entitled to claim certain employee expenses or
should use a standard deduction for 1993; and (5) whether
petitioners are liable for an accuracy-related penalty for 1993.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect during the years in issue,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
FINDINGS OF FACT
Petitioners Stephen (now deceased) and Pamela Rifkin were
married during the years under consideration, and they resided in
Laguna Beach, California, at the time their petition was filed.
Mrs. Rifkin graduated from high school in 1972, continued on
through 1 year of college, and, in 1978, married Mr. Rifkin.
Mrs. Rifkin obtained an associate of arts degree in about 1989,
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