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6662(a) of $11,656.60 for 1996 and $11,845.20 for 1997.1 After
concessions, the issues for decision are:
1. Whether respondent bears the burden of proof under
section 7491(a) as to the items of income and deduction
disallowed in the notice of deficiency. We hold that respondent
does not.
2. Whether petitioner had unreported income of $64,108.94
for 1996 and $21,942.75 for 1997. We hold that he did.
3. Whether petitioner may deduct miscellaneous expenses
related to his Schedule C business of $15,302 for 1996 and
$25,746 for 1997. We hold that he may not.
4. Whether petitioner is liable for the addition to tax for
failure to timely file under section 6651(a)(1) for 1997. We
hold that he is not.
5. Whether petitioner is liable for the accuracy-related
penalty under section 6662(a) for 1996 and 1997. We hold that he
is.
Section references are to the Internal Revenue Code in
effect for the applicable years. Rule references are to the Tax
Court Rules of Practice and Procedure.
1 After concessions, respondent now contends that
petitioner is liable for deficiencies in his Federal income taxes
of $27,555 for 1996 and $15,512 for 1997, an addition to tax of
$3,865.75 under sec. 6651(a)(1) for 1997, and accuracy-related
penalties under sec. 6662(a) of $5,511 for 1996 and $3,102.40 for
1997.
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