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Background
These cases were submitted fully stipulated pursuant to Rule
122. The stipulations of the parties, with accompanying
exhibits, are incorporated herein by this reference.
Petitioners are husband and wife. Petitioner Louis A. Cox
(Mr. Cox) is a consulting engineer and software developer.
Throughout the years in issue, he operated a sole proprietorship
providing engineering and software services under the name of Cox
Associates. In addition, in 2001 and 2002, Mr. Cox also provided
consulting services through Cox Associates, Inc., an S
corporation. Mr. Cox and petitioner Christine Cox (Mrs. Cox)
each held a 50-percent stock ownership interest in this
corporation. Generally, the corporation handled larger projects
involving subcontractors and/or government contracts. Smaller
projects were handled through the sole proprietorship. Mrs. Cox
provided accounting, bookkeeping, and administrative services for
the businesses.
Following an extension of time, petitioners timely filed a
joint Form 1040, U.S. Individual Income Tax Return, for 1999 in
October of 2000. They reported adjusted gross income of
$325,748, taxable income of $276,971, total tax of $101,094,
total payments of $1,000, and an amount owed (after an addition
of $4,222 from Form 2210, Underpayment of Estimated Tax by
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Last modified: May 25, 2011