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The issues for decision are: (1) Whether petitioner was
engaged in the trade or business of consulting in 1995, and, if
so, whether petitioner is entitled to claim Schedule C expenses
relating to the consulting activity for the 1995 tax year; and
(2) whether petitioner is liable for an accuracy-related penalty
pursuant to section 6662(a).
Some of the facts have been stipulated and are so found.
The stipulation of facts and the exhibits submitted at trial are
incorporated herein by this reference. At the time the petition
was filed, petitioner resided in San Diego, California.
In 1991, petitioner began working as an engineer for Silicon
Systems (Silicon) in Orange County, California, and he was laid
off from Silicon in 1992. Thereafter, in the same year,
petitioner established Fairbanks Laboratories (Fairbanks) as a
sole proprietorship to provide state-of-the-art consulting
services to the communications industry. In connection
therewith, petitioner eventually installed several computers and
communication lines in his home.
Petitioner’s first consulting contract in 1992 was with
Silicon, his former employer, in connection with the relocation
of its manufacturing facility. Petitioner earned $17,431 in 1992
from his consulting activity and reported gross receipts of
$17,431 and net profit of $5,630 on Schedule C attached to his
1992 Federal income tax return.
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