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Respondent determined a deficiency in petitioner’s Federal
income tax and an accuracy-related penalty for 1997, as follows:
Penalty
Deficiency Sec. 6662(a)
$9,017 $1,803.40
After concessions by the parties,2 the issues remaining for
decision are as follows:
(1) Whether petitioner is entitled to a deduction for an
office in the home. We hold that he is to the extent provided
herein.
(2) Whether petitioner is entitled to a deduction for
repayment of principal on a bank loan. We hold that he is not.
Background
Some of the facts have been stipulated, and they are so
found. Petitioner resided in Pasadena, California, at the time
that his petition was filed with the Court.
2 Respondent concedes: (1) Petitioner did not receive
unreported gross receipts; (2) petitioner is entitled to a
Schedule C, Profit or Loss From Business, deduction for interest
expense in the amount of $1,279; (3) petitioner is entitled to
additional Schedule C deductions in the amount of $3,400; (4)
petitioner is entitled to an additional Schedule C deduction for
rent expense in the amount of $787; and (5) petitioner is not
liable for the accuracy-related penalty under sec. 6662(a).
Petitioner concedes that he is not entitled to a Schedule C
deduction for salaries and wages.
The imposition of self-employment tax, the deduction under
sec. 164(f) for one-half of the self-employment tax, and the
earned income credit are mechanical matters the resolution of
which depends on our disposition of the disputed issues and the
parties’ concessions.
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