Curtis Earl Moore - Page 5

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               In a notice of deficiency dated January 8, 2002, respondent            
          made adjustments to the 1998 return as follows:                             
               Unreported unemployment compensation        $294                       
               Disallowed itemized deductions             7,400                       
               Disallowed Schedule C deductions          27,749                       
          As a result of these adjustments, respondent determined that                
          there was a self-employment tax of $2,444.1                                 
               The omitted unemployment compensation of $294 was paid to              
          petitioner.  The disallowed itemized deductions fall into two               
          categories.  The first is net disallowed medical and dental                 
          expense of $3,869, which appears to be attributable to both                 
          petitioner and Ms. Moore.2  The second is net disallowed                    
          miscellaneous deductions for employee business expense, which               
          amounted to $3,531.  All the other adjustments in the notice of             
          deficiency relate to Wee Ones Child Care.  When petitioner and              
          Ms. Moore were advised of the adjustments, Ms. Moore did not                
          dispute the proposed adjustments and instead executed a waiver              
          permitting assessment.                                                      
               Petitioner made an initial attempt during the examination to           
          submit information relating to the employee business expense                
          deduction.  Later petitioner submitted a Form 8857, Request for             


               1  Half of this amount or $1,222 is an allowable deduction             
          for self-employment tax.                                                    
               2  The record does not reveal any breakdown of the portion             
          of the medical expense deduction attributable to petitioner or              
          Ms. Moore.                                                                  





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