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effect for the year in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
Respondent determined a deficiency in petitioners’ Federal
income tax of $21,149 and an accuracy-related penalty of
$4,229.80 for the taxable year 1996.
The issues for decision are: (1) Whether petitioners are
entitled to various business expense deductions disallowed by
respondent, or to any itemized deductions in lieu thereof, and
(2) whether petitioners are liable for the accuracy-related
penalty under section 6662(a) for negligence or disregard of
rules or regulations.1
Some of the facts have been stipulated and are so found.
The stipulations of fact and the attached exhibits are
incorporated herein by this reference. Petitioners resided in
Sausalito, California, on the date the petition was filed in this
case.
Petitioner husband (Mr. Brayshaw) has a background in
mathematics and physics as well as corporate law. During the
year in issue, he was involved in several business activities.
First, he was engaged in the development of computer software
which would predict water currents in the San Francisco Bay area.
In connection with this activity, he periodically took
1Adjustments to self employment income tax and the deduction
therefor are computational and will be resolved by the Court’s
holding on the issues in this case.
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