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to a deduction on Schedule A, Itemized Deductions, for
unreimbursed employee business expenses of $28,947, subject to
the limitations set forth in section 67(a).
Jose A. Batres (Mr. Batres) and Dina Batres filed their 1995
joint Federal income tax return and reported wage income of
$18,327. Included in the return is a Schedule E for a
“commercial tractor”, on which the Batreses reported rents of
$22,374 and expenses totaling $22,374, resulting in zero income
or loss. In the notice of deficiency, respondent determined that
the Batreses had unreported Schedule C income of $41,5473 and
allowable Schedule C expenses of $22,590. Wage income was
reduced by $18,327. Respondent further determined that
petitioners were liable for self-employment tax of $2,679, and
$1,340 was allowed as a deduction for self-employment taxes. Mr.
and Mrs. Batres have not contested the amount of income
determined by respondent to have been received by Mr. Batres from
his trucking operation. Respondent now does not contest that Mr.
Batres’ income was received as an employee, subject to the
resolution of the lease activity issue, and the Batreses are
entitled to a deduction on Schedule A for unreimbursed business
3 This amount includes additional unreported income that
was not reported as either wages or Schedule E rents on the 1995
return.
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Last modified: May 25, 2011