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based on petitioner’s adjusted gross income. The parties
stipulated that petitioner is subject to self-employment tax and
is entitled to a deduction for one-half of the self-employment
tax and that the exemption and taxability of petitioner’s Social
Security receipts are computational and depend on petitioner’s
adjusted gross income.
Finally, the parties agreed that the only issues in dispute
for the Court to decide are the first five issues discussed
below. In addition to those five issues, respondent requested in
his posttrial brief that we impose penalties against petitioner
under section 6673(a)(1). Petitioner objected to the imposition
of section 6673(a)(1) penalties, contending that his arguments
were correct and requesting that we specifically address the
“Delpit”, “Scar”, and “Agency” issues.
OPINION
Petitioner’s Failure To Report $170,619 of Income in 1996
Section 6001 provides that “Every person liable for any tax
imposed by this title, or the collection thereof, shall keep such
records, render such statements, make such returns, and comply
with such rules and regulations as the Secretary may from time to
time prescribe.” Section 1.6001-1(a), Income Tax Regs., requires
any person required to file a return to “keep such permanent
books of account or records, including inventories, as are
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