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taxable year 2000, petitioner did not maintain a tip diary or
other log.
Petitioner electronically filed a Form 1040EZ, Income Tax
Return for Single and Joint Filers With No Dependents, for
taxable year 2000. On March 30, 2002, petitioner filed a Form
1040X, Amended U.S. Individual Income Tax Return, for taxable
year 2000. On his Form 1040X petitioner claimed an additional
capital loss and itemized his deductions. These changes, which
have been accepted by respondent, reduced the amount of tax shown
by petitioner on the return. Petitioner did not declare any room
service tips to the Hilton during taxable year 2000. Also,
petitioner did not report additional tips, above the $784 of
tips, previously discussed, on either his Form 1040EZ or his Form
1040X.
In the notice of deficiency,2 respondent determined that
petitioner failed to report tip income of $17,046, which was
computed by multiplying petitioner’s hours worked, 1,919.6, by a
rate of $8.88 per hour. At trial, however, respondent stated
that it would be more appropriate to compute petitioner’s tip
income for taxable year 2000 on the same basis as the room
service food servers who participated in the Tax Compliance
2The notice of deficiency failed to take into account the
additional capital loss, itemized deductions, and reduced tax as
reported on petitioner’s Form 1040X. Respondent concedes that
when any deficiency is computed, the computation should take into
account these adjusted amounts.
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Last modified: May 25, 2011