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deduction and above-the-line treatment of the deduction for her
attorney’s fees and costs, which respondent allowed in the notice
of deficiency as an itemized deduction subject to the 2-percent
limitation of section 67.
Some of the facts have been stipulated and are so found.
The stipulations of fact and accompanying exhibits are
incorporated by this reference. For clarity and convenience,
findings of fact and discussion with respect to the validity of
respondent’s notice and petitioner’s deduction claims are
combined under two separate headings. Monetary amounts have been
rounded to the nearest whole dollar.
Petitioner resided in Poway, California, when the petition
in this case was filed.
Issue 1: Validity of Statutory Notice
During 1975, petitioner sold insurance products as an
employee of Fidelity Union Life Insurance Company (Fidelity).
During 1976 and 1977, petitioner operated as a sole owner and
paid for the costs of operating her business as an independent
insurance salesperson with Fidelity. Petitioner reported her
1976 and 1977 earnings from the sale of Fidelity insurance
products on Schedule C of her 1976 and 1977 Federal income tax
returns. After 1977, petitioner never again sold insurance, but
worked off and on, sometimes as an employee and sometimes as an
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