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The issues for our consideration are: (1) Whether
petitioner has shown entitlement to various Schedule C, Profit or
Loss From Business, deductions; and (2) whether the resulting
underpayment was due to a substantial understatement of income
tax and/or negligence so as to make petitioner liable for the
accuracy-related penalties under section 6662(a).1
FINDINGS OF FACT
Petitioner Valentina Perrah resided in Mira Loma,
California, at the time the petition was filed in this case.
Petitioner was a real estate broker who owned and operated a
Century 21 office in Mira Loma during taxable years 1994 and
1995. This office operated under the name “Amera-Star Realty”,
and petitioner reported its income and deductions on a Schedule C
attached to her Federal income tax returns.
For taxable years 1994 and 1995, petitioner’s original
individual income tax returns were prepared by petitioner’s
accountant of approximately 7 years, Ron Kington. Her Schedule C
reflected $239,481 of deductions for taxable year 1994 which
included, inter alia, $15,303 for advertising costs, $4,390 in
car and truck expenses, and $27,960 for other expenses such as
1 All section references are to the Internal Revenue Code in
effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
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Last modified: May 25, 2011