Fredie Lynn Charlton - Page 4




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          and 1402(a)(5)(A).  See Charlton v. Commissioner, 114 T.C. 333,             
          337 (2000).  We denied rental cabin deductions because they were            
          preoperational expenses.  See id. at 338.  We held that Charlton            
          qualifies for limitation of liability under section 6015(c) to              
          the extent that the unreported Medi-Task income is allocable to             
          Hawthorne.  See id. at 340-342.  Charlton improperly netted the             
          Medi-Task income and expenses petitioners had reported with                 
          expenses of the rental cabins to compute self-employment income.            
          That error caused a self-employment tax deficiency.  An                     
          additional self-employment tax deficiency occurred because                  
          Charlton and Hawthorne underreported Medi-Task income.  We                  
          accepted respondent’s unopposed suggestion that the parties                 
          allocate items under section 6015(d) as part of the Rule 155                
          computations.  See id. at 342.                                              
               After we filed our opinion in Charlton v. Commissioner,                
          supra, respondent determined that Hawthorne is entitled to relief           
          under section 6015(f).                                                      
                                     Discussion                                       
               Respondent contends that the tax on Medi-Task income and the           
          increase in self-employment tax attributable to the unreported              
          Medi-Task income are allocable to Hawthorne, and that the                   
          deficiency to the extent that it was attributable to denied                 
          rental cabin deductions is allocable to Charlton.  Charlton                 
          contends that deductions for $2,050 of unclaimed Medi-Task                  







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