Jimmy A. Prince - Page 2

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          accuracy-related penalties of $7,372, $17,842, and $14,291.1                
          Respondent also determined as to 1997 that petitioner was liable            
          for a $9,215 addition to tax under section 6651(a)(1).                      
               Following concessions,2 we are left to decide:                         
               1.  Whether the 3-year period of limitations under section             
          6501(a) has run on 1997.  We hold it has not.                               
               2.  Whether petitioner may deduct self-employment expenses             
          in amounts greater than those allowed by respondent.  We hold he            
          may not.                                                                    
               3.  Whether petitioner may deduct for 1998 a $37,181 net               
          operating loss (NOL) carryover.  We hold he may not.                        
               4.  Whether petitioner may deduct dependency exemptions for            
          his daughter Keauna (Keauna) and his son Zik (Zik).  We hold he             
          may not.                                                                    

          1 Unless otherwise indicated, section references are to the                 
          Internal Revenue Code in effect for the subject years, Rule                 
          references are to the Tax Court Rules of Practice and Procedure,            
          and dollar amounts are rounded.                                             
          2 In addition to the concessions made explicitly, we                        
          consider petitioner to have conceded respondent’s determination             
          of unreported income by virtue of the fact that petitioner did              
          not address this issue on brief.  We hold without further comment           
          that petitioner underreported the 1997 and 1998 gross income of             
          his sole proprietorship by $5,261 and $26,631, respectively, as             
          determined by respondent.  See Levin v. Commissioner, 87 T.C.               
          698, 722-723 (1986), affd. 832 F.2d 403 (7th Cir. 1987);                    
          Zimmerman v. Commissioner, 67 T.C. 94, 104 n.7 (1976); see also             
          Remuzzi v. Commissioner, T.C. Memo. 1988-8, affd. without                   
          published opinion 867 F.2d 609 (4th Cir. 1989).                             

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