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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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Last modified: May 25, 2011