- 12 - Generally, respondent determined that petitioners should have included the nonemployee income reflected on the Forms 1099- MISC in gross income and not in an offset format on their Forms 2106. In years where petitioners claimed the excess of employee expenses over nonemployee compensation on the Schedules A, respondent determined that said excess expenses had not been substantiated or shown by petitioners to be ordinary and necessary.8 Respondent employed the following explanatory language, with certain minor variations for each group of petitioners, in determining the relevant adjustments to petitioners’ income: Nonemployee Compensation It is determined that you have nonemployee compensation from American Energy Services, Inc. in the amount of * * * rather than * * * as reported on your * * * income tax returns. Accordingly, your taxable income is increased * * *. Itemized Deductions * * * [year] It is determined that you have miscellaneous expenses, subject to the two percent of adjusted gross income 8 In years where there was an excess of expenses over the amount of nonemployee compensation on the Forms 2106, petitioners claimed the excess on the Schedules A as itemized deductions. In those years, respondent determined that the nonemployee compensation was includable in gross income and disallowed the excess expenses claimed on the Schedules A. In years where the nonemployee compensation exceeded the expenses claimed on the Forms 2106 and petitioners reported the excess on page 1 as gross income, respondent determined that the amounts that had been offset on the Forms 2106 were also includable on page 1 as gross income. In either event, respondent did not explicitly disallow the expenses claimed on the Forms 2106.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011