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Background
Petitioner timely filed her 1998 Federal income tax return
(return), reporting $14,379 of income and $6,918 of employment-
related expenses. Petitioner reported her income, including her
W-2, Wage and Tax Statement, income from USA Mobile, and also her
employment-related expenses on Form 1040, Schedule C, Profit or
Loss From Business, (Schedule C). She did not report her W-2
income on line 7 of Form 1040, U.S. Individual Income Tax Return,
nor did she report any employment-related expenses on Form 1040,
Schedule A, Itemized Deductions, (Schedule A).
On October 3, 2000, respondent issued to petitioner a notice
of proposed changes (30-day letter), in which respondent proposed
to deny petitioner’s claimed Schedule C expense deductions and to
increase petitioner’s tax liability by $1,292, plus interest.
Petitioner’s first written response to respondent was a
handwritten letter (first letter), dated October 3, 2000,
stating, in part:
On October 3, 2000, I spoke with * * * about the
notice I received in the mail * * *. During our phone
conversation he informed me on why the IRS had sent me
this particular notice concerning my 1998 tax return.
I, Jennifer Lynn Rusley, understand that my W2
income should be on line 7 and that my expenses should
be on Schedule A via 2106.
Respondent received this letter on October 6, 2000. Petitioner
then sent to respondent a handwritten note (second letter) that
she wrote on a copy of the 30-day letter. The second letter
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Last modified: May 25, 2011