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expenses. Respondent additionally allowed $400 of the $4,032 for
labor expenses, but disallowed the remaining expenses because
there was no record that Forms 1099, Miscellaneous Income, were
issued. Respondent further allowed $1,200 of the $4,441 claimed
for small tools expense. Petitioner then stipulated to a
deficiency of $4,478 plus interest. A decision was entered by
the Court on December 17, 1998.
On April 19, 1999, respondent sent to petitioner a notice of
intent to levy. On May 3, 1999, petitioner timely filed Form
8857, Request for Innocent Spouse Relief, requesting section 6015
relief from joint and several liability for the year in issue.
On March 15, 2001, respondent sent to petitioner a notice of
determination denying section 6015 relief. The determination was
based on the conclusion that petitioner had knowledge of the
business and its activities that precluded relief. In an
amendment to the answer filed April 22, 2002, in this case,
respondent raised the defense of res judicata.
On March 10, 2000, respondent applied an overpayment of
$2,323 from petitioner’s 1999 Federal income tax return towards
the 1994 liability. Following the March 15, 2001, determination,
respondent applied an overpayment of $2,367 from petitioner’s
2000 Federal income tax return towards the remaining 1994
liability. On April 15, 2002, respondent notified petitioner
that her 2001 refund of $1,895 was delayed until respondent
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