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return, petitioner directed that the overpayment be applied to
his 2000 estimated tax.
On the 2000 return, petitioner reported gross receipts of
$64,957.98, total expenses of $21,400.36, and net profit of
$43,557.62. He also reported a $400 IRA distribution as income
and claimed an IRA deduction of $1,000. He reported adjusted
gross income of $42,957.62. He claimed the standard deduction of
$4,400, deducted $2,800 for one exemption, and reported taxable
income of $35,757.62 ($42,957.62 - $4,400 - $2,800). Petitioner
reported tax of $6,605 without regard to his self-employment tax.
Petitioner made numerous mistakes in calculating his 1999
and 2000 tax liabilities. In computing his self-employment tax
for 2000, petitioner correctly reported his net earnings from
self-employment to be $40,225; i.e., 92.35 percent of his
Schedule C net profit ($43,558 x 0.9235). However, petitioner
erroneously calculated his self-employment tax to be $1,665, as
follows:
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