Michael Sklar and Marla Sklar - Page 3




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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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