- 10 - "'[T]axable income' means gross income minus the deductions allowed". Sec. 63(a). Gross income is derived from gross receipts less cost of goods sold. See Beatty v. Commissioner, 106 T.C. 268, 273 (1996); sec. 1.61-3(a), Income Tax Regs. Furthermore, as pointed out above, the determination of the taxable income of a partnership is essentially the same as with an individual. Sec. 703(a). There is no indication that in enacting the taxable income limitation in section 179(b)(3)(A) Congress did not understand and intend these terms to have their settled meaning. In short, section 1.179-2(c)(2), Income Tax Regs., flows directly from the requirements of section 179(b)(3)(A) and (d)(8), is consistent with the statutes and their legislative histories, and is valid. Therefore, respondent's determination on this issue is sustained. 2. Section 6662-Penalty Section 6662(a) imposes a penalty with respect "to any portion of an underpayment of tax required to be shown on a return" which is attributable to negligence or disregard of rules or regulations. Sec. 6662(b)(1). The penalty is in an amount "equal to 20 percent of the portion of the underpayment to which this section applies." Sec. 6662(a). Petitioners claimed on Schedule C a deduction in the amount of $17,630 as "payroll taxes". Of that amount, $9,284 was payment made for petitioners' 1993 Federal income tax liability. Section 275(a)(1) provides: "No deduction shall be allowed for *Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011