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Respondent determined for 1998 a deficiency in petitioners'
Federal income tax of $10,338 and an addition to tax under
section 6651(a)(1) of $2,434.50. The issues for decision are:
(1) Whether petitioners are entitled to deductions on Schedule C,
Profit or Loss From Business, in excess of those allowed by
respondent; and (2) whether petitioners are subject to an
addition to tax under section 6651(a)(1) for failure to file
timely their 1998 Federal income tax return.
Background
The stipulation of facts and the exhibits received into
evidence are incorporated herein by reference. Petitioners
resided in Houston, Texas, at the time the petition was filed.
During the year in issue, Mr. Ferrada was employed as a
contractor in the aviation industry. Petitioners also operated a
food stand.
1. Mr. Ferrada's Employment
In October 1997 petitioners and their son lived in Tucson,
Arizona. At that time, Mr. Ferrada was hired by Global Technical
Services (GTS), an Air Force subcontractor, for a position of
indefinite length in Lake Charles, Louisiana. In December 1997
GTS was replaced as a subcontractor by Air Mate. Mr. Ferrada
continued to work in the same position for Air Mate. In February
1998 Mr. Ferrada began working for Hi-Tec Associates, Inc. (Hi-
Tec). He continued working on the same project as before but in
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