Randall and Lynn Bishop - Page 2




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               Michael G. Moore, for petitioners.                                     
               Nancy L. Spitz, for respondent.                                        

                                 MEMORANDUM OPINION                                   

               HALPERN, Judge:  By notice of deficiency dated May 13, 1998            
          (the notice), respondent determined a deficiency in petitioners’            
          Federal income tax for 1994 in the amount of $58,632 and an                 
          accuracy-related penalty in the amount of $11,726.40.                       
          Petitioners have conceded certain of respondent’s adjustments               
          giving rise to that deficiency.  The issues remaining for                   
          decision are (1) certain adjustments by respondent to deductions            
          claimed by petitioners for depreciation, office expenses, rental            
          expenses, and expenses for meals and entertainment, (2) certain             
          ancillary consequences of respondent’s adjustments, and (3)                 
          petitioners’ liability for the accuracy-related penalty.1                   
               Some facts have been stipulated and are so found.  The                 
          stipulation of facts, with accompanying exhibits, is incorporated           
          herein by this reference.  We need find few facts in addition to            
          those stipulated and shall not, therefore, separately set forth             
          our findings of fact.  We shall make additional findings of fact            




               1  The deficiencies also reflect adjustments to petitioners’           
          itemized deductions, personal exemptions, the credit for self-              
          employment taxes, and the sec. 164(f) deduction for one-half of             
          self-employment taxes, all of which derive from the principal               
          adjustment and are not directly disputed by petitioners.                    




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