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jurisdiction over the issue of whether the expenses claimed on
the Forms 2106 are deductible.7 Respondent’s position, however,
is that subsumed within the inclusion of the Form 1099-MISC
nonemployee compensation in gross income is a disallowance of the
employee expenses that petitioners used to offset the income on
the Forms 2106. Respondent also points out that petitioners did
not claim the offsetting expenses as deductions for or from AGI.
Following that reasoning, respondent contends that there was
nothing to disallow.
Petitioners rely on section 7522(a), requiring that the
Commissioner, in notices of deficiency, “describe the basis for,
and identify the amounts (if any) of, the tax due”. Section 7522
provides, however, that “An inadequate description * * * shall
not invalidate * * * [a] notice.” In addition, as we pointed
out in Shea v. Commissioner, 112 T.C. 183, 195 (1999): “Congress
enacted section 7522 with the expectation that the IRS would
‘make every effort to improve the clarity of all notices * * *
that are sent to taxpayers.’ H. Conf. Rept. 100-1104 (Vol. II),
at 219 (1988), 1988-3 C.B. 473, 709.”
7 In addition to their contention that respondent did not
make a determination, petitioners also point out that their
petitions did not include an assignment of error with respect to
the questioned expenses. Petitioners did, however, allege error
with respect to respondent’s determination that the Form 1099-
MISC compensation should be included in gross income on page 1 of
petitioners’ returns.
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Last modified: May 25, 2011