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and cost of goods sold claimed on Schedule C, Profit or Loss From
Business.
The parties also stipulated that petitioner failed to report
income of $62,061 in 1997, and that petitioner is entitled to
deductions on Schedule A, Itemized Deductions, of $21,929 for
1996 and $21,061 for 1997, subject to any statutory limitations
based on petitioner’s adjusted gross income. The parties
stipulated that petitioner is subject to self-employment tax and
is entitled to a deduction for one-half of the self-employment
tax and that the exemption and taxability of petitioner’s Social
Security receipts are computational and depend on petitioner’s
adjusted gross income.
Finally, the parties agreed that the only issues remaining
in dispute were petitioner’s failure to report $170,619 of income
in 1996;3 petitioner’s right to Schedule C deductions and cost of
goods sold in 1996, airplane expenses, and a home office
deduction; and accuracy-related penalties under section 6662(a).
In addition to those five issues, respondent requested in his
posttrial brief that we impose penalties against petitioner under
section 6673(a)(1). Petitioner objected to the imposition of
section 6673(a)(1) penalties, contending that his arguments were
3On brief, respondent conceded that petitioner’s unreported
income for 1996 was $54,516, rather than $170,619; our opinion
sustained respondent’s concession to this effect, as well as
respondent’s other adjustments that remained in issue.
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