Mary T. King and Fatai O. King - Page 5




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                  Respondent also determined in the notice of deficiency                
             that petitioners had failed to report interest income in                   
             the aggregate amount of $489 that they had received during                 
             1993 from accounts at three banks.  Finally, respondent                    
             determined that petitioners had failed to report “rental                   
             income” in the amount of $14,067.                                          
                  At trial, petitioners introduced into evidence an                     
             amended return on Form 1040X.  Petitioners had submitted                   
             the amended return to the Internal Revenue Service prior                   
             to trial, but it was never processed and the notice of                     
             deficiency is based upon petitioners’ original return.  The                
             amended return claims cost of goods sold with respect to                   
             petitioner’s newsstand business in the amount of $11,809,                  
             the amount determined in the notice.  The amended return                   
             also reports rental income from “News Stand Rental” in the                 
             amount of $14,067, the amount determined in the notice.                    
             The Schedule C attached to the amended return reports the                  
             following income and expenses:                                             

















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