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Respondent determined a deficiency of $3,459 in petitioner’s
1998 Federal income tax and a section 6662(a) penalty of $691.80.
The issues for decision are: (1) Whether petitioner is entitled
to a theft loss deduction; (2) whether petitioner is entitled to
any deductions claimed on a Schedule C, Profit or Loss From
Business, included with his 1998 Federal income tax return; and
(3) whether the underpayment of tax required to be shown on
petitioner’s 1998 Federal income tax return is due to negligence.
Background
Some of the facts have been stipulated and are so found. At
the time the petition was filed petitioner resided in Pasadena,
Texas.
Petitioner is a certified welder. As such, he has been
certified by various professional organizations as qualified to
perform and supervise certain types of welds and welding
procedures. During 1998 he was employed by and worked 50 to 60
hours per week for Union Tank Car Company (Union).
Prior to the year in issue, petitioner obtained a U.S.
patent (the patent) on a device used in certain welding
operations. Over the years, petitioner attempted (apparently
unsuccessfully), through various business relationships, to
generate income from the patent. As of the beginning of 1998,
however, it is unclear whether petitioner held any rights in the
patent.
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