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1995 return. Mr. Weiler listed his occupation as “outside
sales”, and Ms. Weiler listed her occupation as “self employed”.
Both petitioners signed the 1995 return.
On the 1995 return, petitioners reported their Form W-2
income. On Schedule C, Profit or Loss From Business, petitioners
claimed a $7,796 loss associated with an aerobic and fitness
business. Mr. Weiler’s name and Social Security number were on
the Schedule C.4 The loss was made up of $1,250 in gross
receipts and $9,046 of total expenses. Petitioners, on Schedule
A, Itemized Deductions, claimed $20,957 of unreimbursed employee
expenses related to Mr. Weiler’s business. Petitioners did not
report any self-employment tax due or claim a self-employment tax
deduction. Petitioners reported $122 of alternative minimum tax
due.
Petitioners did not report the $14,065 of Form 1099 income
paid to Ms. Weiler by Sporthouse. In early 1996, Ms. Weiler was
aware of the Form 1099. Before the audit of their 1995 tax year
in 1998, Mr. Weiler was unaware of Ms. Weiler’s $14,065 of
additional income from Sporthouse. Around the time of the audit,
Ms. Weiler stated to Mr. Weiler that she had forgotten to tell
him about it. Ms. Weiler never took any steps to amend the 1995
4 Mr. Weiler was not engaged in an aerobic and fitness
business in 1995.
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