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any evidence or credible argument that this income was not
taxable to him for the subject year. Respondent, on the other
hand, clearly established that petitioner was self-employed
during 1999 and that he received the above-referenced amount in
connection with his self-employment business. That evidence
includes: (1) A copy of petitioner’s realtor’s license; (2) a
copy of an independent contractor’s contract between petitioner
and Queen’s Bay, the owner and developer of the London Bridge
Resort Time Share Condominium; and (3) a payroll check register
of LLC indicating that LLC paid petitioner during the relevant
year for his services. The record also includes the testimony of
the custodian of records of LLC to the effect that petitioner
provided services for and received income from LLC.
Second, petitioner received a tax refund of $266 from the
State of California. Under the tax benefit rule, State income
tax refunds are taxable if the amount of the tax refund was
deducted in a prior year and the deduction resulted in a
reduction of tax for that year. Sec. 111; Kadunc v.
Commissioner, T.C. Memo. 1997-92; sec. 1.111-1(a), Income Tax
Regs. The amount of the refund is taxable to petitioner absent
his proving to the contrary. Petitioner has failed to present
any evidence or testimony to the effect that the amount of this
tax refund was not taxable to him for the subject year.
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Last modified: May 25, 2011