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Respondent also determined penalties and/or additions to the tax.
On January 8, 2001, petitioners’ petition was timely filed with
this Court.
Respondent’s answer was filed on March 1, 2001. In his
answer, respondent admitted error with respect to the
determination of additional self-employment tax, as follows:
Adjustment of Self-Employment Income to $83,514.00 in
Lieu of $6,694.00: Admits respondent erred in
determining petitioners received self-employment income
in the amount of $83,514 in lieu of $6,694 reported on
their return. Given this admission of error,
respondent alleges as a matter of computation,
petitioners’ self-employment tax should not be
increased, nor should they be allowed an increased
self-employment tax deduction, as determined in the
notice of deficiency. [Emphasis supplied.]
Petitioners contend that respondent should not be allowed to
take away the $4,062 deduction allowed in connection with the
determination of additional self-employment tax liability because
the period for assessment and, hence, the period within which
respondent may make changes or adjustments expired prior to the
time respondent conceded the self-employment income adjustment.
Discussion
Petitioners’ argument is based on their interpretation of
the language of the consents executed by the parties in
connection with the extension of the assessment period. In
particular, petitioners reference the portion of the consent form
which provides that in the event respondent issues a Notice of
Deficiency within the consent period, the period is further
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