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had not been included in the gross income and/or used in the
computation of petitioners’ respective taxable income.
In his determination, respondent increased petitioners’
gross income by the amount of the compensation that had been
reflected on the Forms 2106. In an attempt to negate
respondent’s income-side determination, petitioners have argued
that, without an explicit expense determination by respondent,
petitioners’ reported positions would remain unchanged.
Petitioners make that argument in spite of the undisputed fact
that their employee expenses were not allowable in offset of
gross income.6 Petitioners have attempted an end run around the
error in their reporting position by arguing that they have
already included the Form 1099-MISC compensation in gross income
by reflecting it on the Forms 2106 and that respondent’s
determination is a duplication. Petitioners’ duplication
argument is circuitous and obviously begs the question. Because
petitioners used the expenses for direct offset, the compensation
was not included in the gross income petitioners used in
computing their tax liabilities.
Section 6212 authorizes the Commissioner to determine a tax
deficiency. Petitioners argue that any failure to make such a
determination results in a lack of our subject-matter
6 If allowable, the expenses would have been deductible from
AGI and subject to sec. 67 and other limitations.
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Last modified: May 25, 2011