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petitioner’s 1992 return based in part upon the information
reported on the Forms 1099 and other information provided by
petitioner.
Ultimately, petitioner’s 1992 Federal income tax return was
filed on August 12, 1998. The return includes a Schedule C,
Profit or Loss From Business, on which the following items are
reported:
Income $34,712
Expenses:
Car and truck 3,000
Rent or lease 4,000
Repairs, etc. 3,000
Supplies 1,000
Net profit 23,712
The income reported on the Schedule C represents the sum of the
amounts reported on the Forms 1099. No other income is reported
on petitioner’s 1992 return. The net profit reported on the
Schedule C is treated as net earnings from self-employment. The
Federal income tax liability of $5,769 reported on the return
consists of a section 1 income tax liability of $2,419 and a
$3,350 section 1401 tax on self-employment income. The section 1
income tax liability takes into account petitioner’s filing
status as single, a personal exemption deduction, the appropriate
standard deduction, and a deduction for one-half of the section
1401 tax.
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