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determined a deficiency in petitioners' joint Federal income tax
for the 1994 tax year in the amount of $6,007. In separate
notices of deficiency mailed to petitioners Juan M. Villarreal
and Miriam J. Villarreal, respondent determined that each of them
is liable for a deficiency and addition to tax under section
6651(a)(1) for the 1995 tax year in the amounts of $4,695 and
$1,173.75, respectively.
Petitioner Juan M. Villarreal filed a petition for
redetermination for the 1995 taxable year at docket No. 20659-97
and petitioner Miriam J. Villarreal filed a petition for
redetermination for the 1995 taxable year at docket No. 20658-97.
Petitioners are husband and wife. References to petitioner are
to Juan M. Villarreal and references to petitioner wife are to
Miriam J. Villarreal.
After concessions,3 the issues for decision are: (1)
Whether petitioners are entitled to claim Schedule C expense
deductions in the amount of $22,400 for the 1994 year; (2)
whether each petitioner failed to report his or her separate
2(...continued)
all Rule references are to the Tax Court Rules of Practice and
Procedure.
3 Petitioners reported a $10,000 capital gain on Schedule D of
Form 1040 for the 1994 tax year, but failed to carry that amount
over to line 13 of their 1994 tax return. Though petitioners
initially contended that the $10,000 amount was a tax-free return
of capital, petitioners now concede that the $10,000 amount
should be treated as long-term capital gain for the 1994 tax
year.
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