Karan M. Hintze - Page 2

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               The first set of issues in this case concerns whether                  
          petitioner realized gross receipts from her sole proprietorship             
          in excess of that reported on her returns.  The second set of               
          issues deals with whether petitioner is entitled to various                 
          deductions for business expenses which petitioner claimed on                
          Schedule C, Profit or Loss From Business, for the years in issue.           
          Finally, we must decide whether petitioner is liable for the                
          additions to tax and penalties determined by respondent.                    
               Unless otherwise indicated, all section references are to              
          the Internal Revenue Code in effect for the years in issue, and             
          all Rule references are to the Tax Court Rules of Practice and              
               At the time the petition was filed in this case, petitioner            
          resided in or near Ketchum, Idaho.  During the years at issue,              
          petitioner operated a sole proprietorship through which she                 
          provided cosmetology services.  Petitioner performed this work              
          out of her condominium apartment as well as at the homes of her             
               In addition to providing services as a cosmetologist,                  
          petitioner developed a new line of business in the field of                 
          micropigmentation.  As explained by petitioner, micropigmentation           
          involves the changing of human body colors through the use of               
          certain injected dyes.  Micropigmentation is used not only in the           

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Last modified: May 25, 2011