Paul E. and Jane Anne Gladden Emerson - Page 2




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               This Court must decide: (1) Whether petitioners                        
          substantiated Schedule A medical expenses of $6,393, Schedule A             
          interest expenses of $3,165, a net operating loss carryover of              
          $16,505, Schedule C expenses of $6,260 related to an                        
          attorney/sales consultant activity, Schedule C expenses,                    
          including cost of goods sold, of $3,433 related to an antiques              
          and jewelry activity, and Schedule C expenses of $26,927 related            
          to an oil and gas activity; (2) whether petitioners are liable              
          for self-employment tax on the income from their Schedule C                 
          activities and are entitled to the corresponding deduction; and             
          (3) whether petitioners are liable for the accuracy-related                 
          penalty.  If petitioners' itemized deductions are less than the             
          standard deduction, petitioners will be entitled to the standard            
          deduction under section 63(b).                                              
               Some of the facts in this case have been stipulated and are            
          so found.  Petitioners resided in Bradenton, Florida, at the time           
          they filed their petition.                                                  
               In 1995, Paul Emerson (petitioner), an attorney, was engaged           
          in the business of an "Attorney/Sales Consultant" and in the                
          business of "Sales-Antiques & Jewelry".  As an attorney/sales               
          consultant, petitioner worked with others and anticipated                   
          becoming the general counsel of an Ohio corporation.  Petitioner            
          worked from home.  During 1995, Jane Emerson (Mrs. Emerson) was             







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