Matthew K. Morgan - Page 3




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          Tax Court Rules of Practice and Procedure.                                  
               Respondent determined a deficiency of $3,210 in petitioner’s           
          1997 Federal income tax.  After concessions by petitioner,1 the             
          sole issue for decision is whether petitioner is entitled to a              
          dependency exemption deduction for his mother.                              
               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.  Petitioner resided in               
          Perris, California, when the petition was filed.                            
               During 1997 petitioner was a full-time employee of San Diego           


               1Petitioner concedes the disallowance of the following                 
          deductions claimed on his Schedule C, Profit or Loss From                   
          Business, concerning his internet service business:  (1) Car and            
          truck expenses of $6,655, (2) meals and entertainment expenses of           
          $780 ($1,560 before taking into account the 50-percent reduction            
          in the deductibility of such expenses under sec. 274(n)), and (3)           
          cellular telephone and other expenses of $2,913.                            
               Petitioner concedes the disallowance of his deduction of               
          $7,376 ($8,000 before taking into account the 2-percent floor on            
          miscellaneous itemized deductions under sec. 67) for legal                  
          expenses on his Schedule A, Itemized Deductions.  As a result of            
          respondent’s adjustment, petitioner’s itemized deductions were              
          reduced to amounts that totaled less than the standard deduction            
          for 1997.  Consequently, petitioner’s tax liability was                     
          determined by respondent using the standard deduction, and                  
          petitioner does not dispute use of the standard deduction.                  
               Petitioner concedes that he did not report a taxable                   
          distribution of $1,400 from his individual retirement account               
          held at the Union Bank of California.  He also concedes that he             
          is liable for the 10-percent additional tax on such distribution            
          pursuant to sec. 72(t).                                                     
               Petitioner’s liability for self-employment tax is a                    
          computational matter and is resolved by petitioner’s concessions            
          set forth above.                                                            







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