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for decision are: (1) Whether petitioner had unreported income of
$10,393; (2) whether petitioner is liable for self-employment tax
on unreported income; and (3) whether petitioner is liable for an
addition to tax under section 6651(a)(1) for the taxable year
1994. Adjustments to the self-employment income tax and the
deduction therefor are computational and will be resolved by the
Court’s holding in this case.
During 1994, petitioner maintained a checking account with
Crestar Bank. Petitioner made various deposits into the checking
account throughout the year totaling $25,860. The various
deposits are categorized as follows: (1) A 1993 State of
Virginia income tax refund for $410; (2) dividend income of $75;
(3) interest income of $185; (4) overdraft protection deposits of
$1,271; (5) credit card advances totaling $1,862; and (6)
proceeds from stock sale transactions of $11,664. As previously
stated, respondent is now contending that the difference, or
$10,393, is income from unexplained bank deposits.
On his tax return, petitioner reported total income of
$3,274, consisting of $3,229 of wages and $45 of taxable interest
income. In the notice of deficiency, respondent deducted these
reported amounts in computing petitioner’s corrected income.
For some period during 1994, petitioner worked for Merkle &
Company (Merkle) as a real estate appraiser. However, petitioner
cannot recollect the exact dates in 1994 that he worked for
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