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Respondent determined deficiencies of $5,644 and $5,936 in
petitioners' Federal income taxes, respectively, for 1998 and
1999 and corresponding penalties under section 6662(a) in the
amounts of $1,129 and $1,187.
Some of the facts were stipulated, and those facts, with the
annexed exhibits, are so found and are incorporated herein by
reference. At the time the petition was filed, petitioners'
legal residence was Albuquerque, New Mexico.
For each of the years in question, petitioners claimed
itemized deductions on a Schedule A, Itemized Deductions, of
their Federal income tax return. For 1998, petitioners claimed
itemized deductions totaling $44,192, of which $21,863 was
disallowed by respondent. For 1999, petitioners deducted
$54,365, of which $21,205 was disallowed by respondent.
Petitioners, nevertheless, were allowed itemized deductions for
both years, since the total of their other claimed and allowed
deductions exceeded the standard deduction under section 63(c).
For the 2 years at issue, the disallowed deductions consisted of
charitable contributions, job expenses, and other miscellaneous
deductions.
During 1998, Mrs. Cisneros won $1,000 from a lottery. That
income was not included as income on petitioners' 1998 Federal
income tax return. Respondent determined that the $1,000
constituted gross income. The issues for decision are: (1)
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