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2002 Form 1040 that he received $29,000 of income from Woodside
and instead agrees that petitioner received income in the amount
of $2,956, as shown on the Woodside Form 1120S and duplicated on
Schedule C, Profit or Loss From Business, of petitioner’s Form
1040.
Primarily on Schedule C of his Form 1040, but in other parts
of the return as well, petitioner also reported $2,956 of gross
income from Woodside but claimed a loss of $30,012, rather than
the $29,000 loss claimed on the Woodside Form 1120S.
Respondent made adjustments to petitioner’s income in the
total amount of $74,964. The adjustments included the $29,000
increase in petitioner’s income which, as stated above,
respondent has conceded.
Petitioner failed to substantiate any of the alleged
business deductions, or $17,805 in Schedule A itemized
deductions, claimed on his Form 1040; so we sustain respondent’s
disallowance of these items.
Respondent determined an accuracy-related penalty pursuant
to section 6662(a), based upon one or more of the following
elements of the penalty: (1) Negligence or disregard of rules
and regulations, or (2) substantial understatement of income tax.
Under section 7491(c), respondent has the burden of production
with respect to any penalty. Respondent has carried this burden
of production.
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Last modified: May 25, 2011