David and Theresa Smeton - Page 3




                                        - 3 -                                         
          summary judgment.                                                           
          Background                                                                  
               A.  Petitioners’ Form 1040 for 1997                                    
               On or about April 15, 1998, petitioners David and Theresa              
          Smeton (petitioners) submitted to respondent a Form 1040, U.S.              
          Individual Income Tax Return, for the taxable year 1997.  On                
          their Form 1040, petitioners listed their filing status as                  
          “married filing joint return” and described their occupations as            
          “tile setter” and “housewife”, respectively.2                               
               Petitioners entered zeros on applicable lines of the income            
          portion of their Form 1040, specifically including line 7 for               
          wages, line 22 for total income, and lines 32 and 33 for adjusted           
          gross income.  Petitioners also entered a zero on line 53 for               
          total tax.  Petitioners then claimed a refund in the amount of              
          $1,804, which amount was equal to the Federal income tax that had           
          been withheld from their wages.                                             
               Petitioners attached to their Form 1040 four Wage and Tax              
          Statements, Forms W-2.  The first Form W-2 was from Arizona                 
          Charlies, Inc. of Las Vegas, Nevada; it disclosed the payment of            
          wages to petitioner Theresa Smeton in the amount of $18,160.03              
          and the withholding of Federal income tax in the amount of                  


               2  Petitioners’ description of Theresa Smeton’s occupation             
          as a housewife appears to be inconsistent with the Wage and Tax             
          Statement, Form W-2, that was issued to her.  This Wage and Tax             
          Statement is described infra in the text.                                   






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