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workers, but he could identify only one worker, Mr. Luis Garcia.
Mr. Martinez estimated that he kept $1,400 of the $3,000.
3. Alpa Construction and Svetella Design, Inc.
Mr. Martinez testified he split both the $5,020 he received
from Alpa Construction (Alpa) and the $3,750 he received from
Svetella Design, Inc. (Svetella), with three or four workers whom
he could not identify. Petitioner did not know how much of the
Alpa income he kept, but he estimated that he kept $1,600 of the
Svetella income.
4. Tax Return Preparation
Petitioners’ 2001 joint return was prepared by Gonzales
Services. Mr. Martinez informed Gonzales Services that he
divided the income he received with other workers. The amount of
income Mr. Martinez reported on his Schedule C-EZ was based on
his own estimates of how much he had earned from his business and
how much he had paid to others. Mr. Martinez’s estimates were
not based on any records.
D. Mrs. Martinez’s Self-Employment Income
In 2001, Fresh Paint Art Advisor, Inc., paid Mrs. Martinez
$3,790, and that was the only income reported on her Schedule C-
EZ. Also during 2001, Los Angeles County (County) paid Mrs.
Martinez $3,150 for providing care to her grandchildren. Mrs.
Martinez used the money from the County for her grandchildren,
but she kept no records of her expenditures.
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Last modified: May 25, 2011