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Petitioners did not include with their return a Schedule C,
Profit or Loss From Business, with respect to the $4,995.03 in
self-employment income, nor did they claim deductions for
expenses in connection with the activity or compute self-
employment taxes on the income. The three sources of this income
reflected on the Forms 1099-MISC earned by petitioner were from
the following sources:
Xprezzo Caffe Club, 11c $1,328.03
Villa Del Rio 1,662.00
Rio Grande Property Management 2,005.00
Total $4,995.03
In the notice of deficiency, respondent determined a
deficiency of $654 in taxes, representing self-employment taxes
due under section 1401(a) and allowing petitioners a deduction
for one-half of the taxes under section 164(f). Respondent's
determination, however, was based only on two of the Forms 1099-
MISC identified above, $1,662 from Villa Del Rio, and $2,005 from
Rio Grande Property Management, totaling $3,667. Respondent's
determination failed to include the $1,328.03 shown above in the
deficiency determination.
In preparation for trial, petitioners prepared and submitted
to respondent an income tax return, Form 1040, for 1999, on which
they correctly reported their income from the various sources
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Last modified: May 25, 2011