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of the amount he deducted for moving expenses was the cost of
replacing the roof on his house in Idaho.
In May 1999, petitioner organized a corporation named
Totally Awesome Internet Services, Inc. (TAIS, Inc.). TAIS,
Inc., was dissolved in April 2000. After dissolution, petitioner
continued to operate the business as a sole proprietorship.
Petitioner prepared and he and Mrs. Clark timely filed a
joint income tax return for 2000. They reported $16,417 of
income, $13 tax due, and $2,616 tax withheld, and they claimed a
$2,603 refund. On a Schedule C, Profit or Loss from Business,
included with that return, they reported $1,682 in gross receipts
and sales for TAI and deducted $12,289 in business expenses.
Jackson Hewitt Tax Service prepared and electronically
filed a joint income tax return for 2001 for petitioner and Mrs.
Clark. On that return, they reported $42,878 of income, $36,781
of itemized deductions, $28 tax due, and $4,551 tax withheld, and
they claimed a $4,523 refund. They deducted $22,131 of
unreimbursed employee expenses petitioner allegedly incurred in
2001.
C. Respondent’s Examination of Petitioner’s Tax Returns for
1998, 2000, and 2001
Respondent selected petitioner and Mrs. Clark’s 1998 Federal
income tax return for examination on August 17, 2001. Petitioner
and Mrs. Clark executed a Consent to Extend the Time to Assess
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