John J. Zanath - Page 4




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          indicating he earned wages of $24,800.  No Federal income tax was           
          withheld from petitioner’s pay in accordance with the Form W-4,             
          Employee’s Withholding Allowance Certificate, completed by                  
          petitioner indicating that he was “exempt”.  Neither Tech-Power             
          nor United Defense required petitioner to attend educational                
          courses or purchase supplies or equipment as a condition of his             
          employment.  Petitioner received unemployment compensation from             
          the State of Colorado in 1996, which was mailed to him at an                
          address in Illinois.  Also during 1996, petitioner stored                   
          personal belongings at a storage facility in Iowa.                          
               Petitioner did not file a Federal income tax return for                
          taxable year 1995.  For taxable year 1996, he did not file a                
          return prior to the time respondent issued him a statutory notice           
          of deficiency for that year.  Although only what appears to be              
          the cover page of the notice of deficiency is in the record,                
          respondent explains the deficiency in his trial memorandum as               
          resulting from wage income of $24,800 and unemployment                      
          compensation of $4,223.1  On October 12, 2000, after filing the             

          1Although we do not have before us the basis of respondent’s                
          determinations in the notice of deficiency, both parties agree as           
          to what issues are before the Court.  Furthermore, it is evident            
          that respondent’s calculation of petitioner’s tax liability was             
          determined as follows:                                                      
                    Wages                               $24,800.00                    
                    Unemployment compensation             4,223.00                    
                    Standard deduction                   (4,000.00)                   
                    Personal exemption                   (2,550.00)                   
                    Taxable income                       22,473.00                    
                    Tax (from 1996 tax table)             3,371.00                    
                                                             (continued...)           




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