Stephen J. Major - Page 3

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               Respondent determined a deficiency in petitioner’s 1997                
          Federal income tax in the amount of $7,562, and an accuracy-                
          related penalty under section 6662(a)(1) in the amount of $1,512.           
               After concessions by petitioner,1 the issues for decision              
          are:  (1) Whether petitioner failed to report $24,000 on his 1997           
          Federal income tax return; (2) whether petitioner is subject to             
          the self-employment tax on this amount; and (3) whether                     
          petitioner is liable for an accuracy-related penalty under                  
          section 6662(a).                                                            
               Some of the facts have been stipulated and are so found.               
          The stipulation of facts and the attached exhibits are                      
          incorporated herein by this reference.  At the time of filing the           
          petition, petitioner resided in Oro Valley, Arizona.                        
               During 1997, petitioner was a full-time employee of Quality            
          Screw & Nut Company (QSN) in its Tucson, Arizona, branch.                   
          Petitioner was the general manager of the branch and conducted              
          regular business in Mexico on behalf of petitioner’s main client,           
          McCulloch Corporation (McCulloch).  McCulloch, based in Tucson,             
          Arizona, manufactured various power tools including gas and                 
          electric chain saws, string trimmers, and blowers.  QSN provided            
          supplies, including screws and nuts, and logistics management for           

               1    Petitioner concedes that he failed to include $24 of              
          taxable interest received from Capital One Federal Savings Bank             
          and $48 of taxable interest received from DM-Federal Credit Union           
          in 1997.                                                                    

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