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Respondent determined deficiencies in petitioner's Federal
income taxes of $4,191 for 1998 and $3,073 for 1999. After
concessions,1 the issue remaining for decision2 is whether
petitioner is entitled to costs of goods sold and deductions on
Schedule C, Profit or Loss From Business, in excess of those
allowed by respondent.
Background
The stipulation of facts and exhibits received into evidence
are incorporated herein by reference. Petitioner resided in
Chico, California, at the time the petition was filed.
During 1998 and 1999, petitioner did sales work for Norfield
Industries in Chico, California. During those years, petitioner
was also engaged as a distributor of "Herbalife" products. On
her 1998 and 1999 Forms 1040, U.S. Individual Income Tax Return,
petitioner reported income and expenses from her Herbalife
activities on Schedules C. Petitioner described her activity as
"Nutrition Consultant."
1In the notice of deficiency, respondent disallowed auto
expenses of $1,863 for 1998 and $3,495 for 1999, and other
interest expenses of $731 for 1998 and $83 for 1999.
Additionally, respondent determined that petitioner received
advance earned income credit payments during 1998 and 1999 in the
amounts of $1,173 and $1,126, respectively. Petitioner did not
report the 1998 advance earned income credit payment on her tax
return. Petitioner has conceded these issues.
2The amounts of any liabilities for and deductions of self-
employment taxes depend on the resolution of the other issues in
this case.
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