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the wages she was paid by the City of New York and the wages she
reported on her return. Respondent also allowed a $1,000 child
tax credit, although no such credit was claimed on petitioner’s
return. The income tax liability shown in the notice of
deficiency is $646. When added to the computational reduction in
the earned income credit ($2,380) that results from the increase
in petitioner’s income, the deficiency amounts to $3,026.
In April 2001, petitioner submitted an amended return to
respondent. The amended return was not processed by respondent
and none of the items reported on the amended return are taken
into account in the notice of deficiency. The amended return
includes a Schedule A, Itemized Deductions, on which the
following deductions are claimed: (1) $1,111 for State and local
income taxes, (2) $10,800 for home mortgage interest; and (3)
$4,355 for gifts to charity. The amended return also includes a
Schedule C, Profit or Loss From Business, on which gross income
of $11,038 is reported, and the following expenses are deducted:
(1) $1,284 for advertising; (2) $1,450 for commissions and fees;
(3) $2,250 for rent; (4) $5,400 for repairs and maintenance; (6)
$3,652 for supplies; (7) $3,254 for utilities; and (8) $7,366 for
“other expenses”. When offset against the gross income reported
on the Schedule C, the foregoing deductions result in the $13,738
net loss shown on that schedule.
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