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her principal business or profession was housekeeping and that
she received gross receipts and a net profit of $3,790.
B. The Notice of Deficiency
On January 26, 2004, respondent issued a Notice of
Deficiency in which he adjusted petitioners’ business income from
$14,840 to $20,710. Respondent adjusted petitioners’ business
income based on Forms 1099 submitted to the Internal Revenue
Service by third-party payers. The Forms 1099 provided as
follows:
Payer of income Payee of income Amount paid
Life Bank Ramiro Martinez $2,000
Dr. Yury Geylikman Ramiro Martinez 3,000
Alpa Construction, Inc. Ramiro Martinez 5,020
Svetella Design, Inc. Ramiro Martinez 3,750
Fresh Paint Art
Advisor, Inc. Maria Martinez 3,790
County of Los Angeles
Auditor Controller Maria Martinez 3,150
Total Amount
Reported 20,710
As a result of his adjustment to petitioners’ business income,
respondent also adjusted petitioners’ self-employment tax, self-
employment tax deduction, and earned income credit. Petitioners
acknowledge that they received the amounts reported on the Forms
1099.
C. Mr. Martinez’s Self-Employment Income
Mr. Martinez was paid for his construction work in
installments by check. Mr. Martinez testified that he would cash
the checks he received and divide the proceeds with other workers
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