- 9 -
stated in those schedules, and (3) constitute ordinary and
necessary business expenses. Respondent determined in the
alternative that the deductions claimed in Schedules F of the
1994 and 1995 joint returns were for expenses incurred in an
activity not entered into for profit and increased the taxable
income reported in those returns by the respective losses of
$32,855 and $15,326 claimed in those schedules (i.e., by the
excess of the deductions claimed over the income reported in each
such schedule).
Respondent further disallowed in the notice the net operat-
ing loss deductions claimed in the 1994 and 1995 joint returns.
Respondent also determined in the notice that the joint
return for 1994 improperly did not report the $3,000 that Ms.
Treadaway received in that year from the sale of the Brenda
property, that no basis in excess of zero in that property was
established, and that that amount is capital gain.
Respondent further determined in the notice that, because of
other determinations therein, 85 percent of the respective
amounts of Social Security benefits that petitioner and Ms.
Treadaway received during 1994 and 1995 are includible in taxable
income for those years.
Respondent also determined in the notice that all of the
underpayment of tax for 1994 and 1995, as determined therein, was
due to negligence or disregard of rules or regulations and
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011