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On her 1993 Federal income tax return, petitioner reported
$38,029 in wage income from SOI, $2,225 in taxable interest
income, and a $729 taxable State income tax refund. Petitioner
also reported a $3,000 capital loss carryover, a $1,817 loss from
rental real estate, and a $17,069 Schedule C loss from the
operation of BRVC. Thus, petitioner reported total income and
adjusted gross income of $19,097 for 1993. On Schedule C,
petitioner reported $2,598 in gross receipts and total expenses
of $19,667, resulting in the reported $17,069 Schedule C loss.
In the notice of deficiency, respondent made the following
adjustments to income for the years at issue:
Adjustment 1992 1993
Hobby income --- $ 2,598
Itemized deductions $ 4,329 (914)
Prior year refund –-- 1,227
Schedule C profit/loss 20,106 17,069
Standard deduction (3,600) –--
Total $20,835 $19,980
These adjustments resulted in deficiencies of $5,838 and $4,349,
respectively, for 1992 and 1993. Respondent also determined that
petitioner was liable for the accuracy-related penalty under
section 6662(a) for negligence or disregard of rules or
regulations of $1,167.60 for 1992 and $869.80 for 1993.
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