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Notice of Deficiency
Respondent determined that $187,741 of the retirement
distributions ($229,924 total distributions less the $42,183
rollover) constituted taxable income, and thus the Cheshires
understated the taxable amount of the retirement distributions by
$131,591 ($187,741 - $56,150). Respondent further determined that
the Cheshires understated (1) their interest income by $717, (2)
their dividend income and capital gains by $132 and $1,889,
respectively, and (3) their self-employment tax by $353. In
addition, respondent disallowed $14,843 in Schedule C expenses. As
a result of these determinations, as well as the late filing of the
1992 return, respondent determined that a section 6651(a)(1)
addition to tax and a section 6662(a) accuracy-related penalty
should be imposed.
Respondent’s Concessions
Prior to trial, respondent conceded that petitioner qualified
for innocent spouse relief with respect to the following:
Item Amount
Schedule C expenses $14,843
Self-employment taxes 353
Capital gains 1,889
Dividend income 132
Interest income 26
Southwestern Bell LESOP distribution 5,919
Southwestern Bell savings plan distribution 23,263
Southwestern Bell ESOP distribution 971
Section 6651(a)(1) addition to tax 16,518
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Last modified: May 25, 2011