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After concessions, the issues remaining for decision are:
(1) Whether petitioners are liable for self-employment tax on the
net self-employment income earned by Mr. Secretario during 1994;
and (2) whether petitioners are liable for an accuracy-related
penalty pursuant to section 6662(a).
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts is incorporated herein by this
reference. At the time the petition was filed, petitioners
resided at Kapaa, Hawaii.
During 1994, Mr. Secretario was self-employed as an
insurance salesman doing business as "Planning Concepts". For
the taxable year 1994, petitioners timely filed their joint
Federal income tax return with respondent's Fresno, California,
Service Center. On Schedule C, Profit or Loss From Business, Mr.
Secretario reported income and expenses from his insurance sales
as a sole proprietorship.
In the notice of deficiency dated February 26, 1997,
respondent determined that petitioners underreported gross
receipts on Schedule C of their 1994 joint return in the amount
of $3,743. Subsequent to the issuance of the notice of
1(...continued)
Procedure.
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