Ramiro and Maria Martinez - Page 2

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          decision is whether petitioners received unreported income for              
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
          The stipulation of facts is incorporated herein by this                     
          reference.  Petitioners resided in Los Angeles, California, when            
          their petition in this case was filed.  Petitioners have limited            
          facility in English, and their testimony was given through an               
          A.   Petitioners’ 2001 Tax Return                                           
               Petitioners timely filed a joint Federal income tax return             
          for 2001.  Petitioners reported $14,840 of business income on the           
          return and listed their respective occupations as self–employed.            
          Each petitioner also filed a separate Schedule C-EZ, Net Profit             
          From Business (Sole Proprietorship), with the return.  Petitioner           
          Ramiro Martinez (Mr. Martinez) reported on his Schedule C-EZ that           
          his principal business or profession was construction and that he           
          received gross receipts and a net profit of $11,050.  Petitioner            
          Maria Martinez (Mrs. Martinez) reported on her Schedule C-EZ that           

               2Respondent increased petitioners’ income by the amount of             
          unreported income he alleges they received, and as a result he              
          also adjusted petitioners’ self-employment tax, self-employment             
          tax deduction, and earned income credit.  The parties agree that            
          the resulting adjustments are computational, and they do not                
          dispute that the adjustments turn on our resolution of the                  
          unreported income issue.                                                    

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