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Respondent determined a deficiency in petitioner’s Federal
income tax of $40,818, and an accuracy-related penalty of
$7,683.20, for the taxable year 1998.
The issues for decision are: (1) With respect to
petitioner’s rental activities, whether the losses petitioner
incurred are subject to the passive activity loss limitations of
section 469; (2) with respect to petitioner’s business
activities, (a) whether petitioner received unreported income as
determined by respondent, and (b) whether petitioner is entitled
to a business expense deduction disallowed by respondent; and (3)
whether petitioner is liable for the accuracy-related penalty
under section 6662(a). The adjustments in the notice of
deficiency to the itemized deductions and to the self-employment
income tax and the deduction therefor are computational and will
be resolved by the Court’s holding on the issues.
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. Petitioner resided in San
Diego, California, on the date the petition was filed in this
case.
Petitioner filed a Federal income tax return for taxable
year 1998 with the filing status of head of household.
Petitioner reported $300 of interest income, a $6,760 business
loss, and a $62,297 loss from rental activities, for an adjusted
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