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Background
A. Petitioners’ Form 1040 for 1998
On or about August 19, 1999, petitioners submitted to
respondent a joint Form 1040, U.S. Individual Income Tax Return,
for the taxable year 1998. On the Form 1040, petitioners listed
their filing status as “Married filing joint return”.
Petitioners entered zeros on applicable lines of the income
portion of their Form 1040, specifically including line 7 for
wages, line 22 for total income, and lines 33 and 34 for adjusted
gross income. Petitioners also entered a zero on line 56 for
total tax. Petitioners claimed an overpayment of $2,333 related
to Federal income tax withholding. Petitioners attached to their
Form 1040 four Forms W-2, Wage and Tax Statement, issued to
petitioners by various employers.
B. Respondent’s Deficiency Notice and Petitioners’ Response
On May 26, 2000, respondent issued to petitioners a joint
notice of deficiency. In the notice, respondent determined a
deficiency of $4,736 in petitioners’ Federal income tax for 1998
and an accuracy-related penalty under section 6662(a) for
negligence or disregard of rules or regulations of $480.53. The
deficiency was based principally on respondent’s determination
that petitioners failed to report the wage income as reported to
respondent by third-party payors on Forms W-2.
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Last modified: May 25, 2011