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Petitioner also signed a document entitled “Final Waiver of
Lien”, which was dated August 28, 2000. This document
acknowledged petitioner’s receipt of $28,143.43 for labor and
material furnished for the renovation of Mr. Muhammad’s rental
property.
By notice of deficiency, respondent determined that
petitioners failed to report on their Federal income tax return
for the taxable year 2000 income earned by petitioner, received
from Mr. Muhammad, for contracting work in the amount of
$30,468.2 Respondent also determined that petitioners are liable
for an accuracy-related penalty in the amount of $2,424 pursuant
to section 6662(a) for the taxable year 2000.
Discussion
In general, the Commissioner’s determination set forth in a
notice of deficiency is presumed correct, and the taxpayer bears
the burden of showing that the determination is in error. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). As one
exception to this rule, section 7491(a) places upon the
Commissioner the burden of proof with respect to any factual
issue relating to liability for tax if the taxpayer maintained
adequate records, satisfied the substantiation requirements,
2This amount was determined by the Form 1099-Misc,
Miscellaneous Income, from Wells Fargo Home Mortgage, Inc., which
reported nonemployee compensation of $32,949, less self
employment tax deduction of $2,481.
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Last modified: May 25, 2011