Walter L. Medlin - Page 45

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          Respondent has also proven that petitioner is liable for self-              
          employment taxes of $5,166 for 1986.  Respondent has proven an              
          underpayment for 1986 by clear and convincing evidence.                     
               3.  Underpayment for 1987                                              
               For 1987, petitioner has specifically conceded the following           
          amounts as income; see appendix C:                                          
                    Income item                             Amount                    
               Schedule C miscellaneous income    $24,000                             
               Gains from property sales     946,649                                  
               Schedule C interest income                    9,084                    
               Total                              979,733                             
          In addition, petitioner did not address on brief the following              
          items of income:                                                            
                    Income item                             Amount                    
               Gain from sale of Silver Lake           $24,577                        
               Interest income                             5,488                      
               Total                                      30,065                      
          Petitioner has conceded those items.  Respondent has produced               
          affirmative evidence for each of the items conceded, and he has             
          proven those items of income by clear and convincing evidence.              
          Thus, respondent has proven by clear and convincing evidence that           
          petitioner received income of $1,009,798 ($979,733 + $30,065) in            
          1987.                                                                       
               Respondent allowed the following deductions for 1987:                  
          Type of deduction                                 Amount                    
               Schedule C expenses                         $265,076                   
               Itemized deductions           43,561                                   
               Exemptions                                  3,800                      
               Total                              312,437                             




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