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MEMORANDUM OPINION
HALPERN, Judge: By notice of deficiency dated February 22,
2001 (the notice), respondent determined deficiencies in
petitioners’ Federal income taxes of $58,127, $22,433, and
$11,221 for their taxable (calendar) years 1996, 1997, and 1998,
respectively.
The issue for decision is whether certain payments received
by petitioner Edgar L. Parker (petitioner) are ordinary income
subject to self-employment taxation or are capital gains income,
which is not subject to self-employment taxation. We conclude
that the payments are ordinary income subject to self-employment
taxation.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years at issue.
Some facts have been stipulated and are so found. The
stipulation of facts, with accompanying exhibits, is incorporated
herein by this reference. We need find few facts in addition to
those stipulated and shall not, therefore, separately set forth
our findings of fact. We shall make additional findings of fact
as we proceed.
Background
At the time the petition was filed, petitioners resided in
Kingwood, Texas.
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