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Unless otherwise indicated, all section references are to the
Internal Revenue Code, as amended, and all Rule references are to
the Tax Court Rules of Practice and Procedure. The issues to be
decided are: (1) Whether petitioners properly reported the gross
receipts of their business; (2) whether petitioners are entitled
to the business expense deductions they claimed on their returns;
(3) whether petitioners are liable for tax on self-employment
income pursuant to section 1401; (4) whether petitioners are
liable for an addition to tax for failure to file timely pursuant
to section 6651(a)(1); and (5) whether petitioners are liable for
accuracy-related penalties pursuant to section 6662.
FINDINGS OF FACT
Some of the facts in this case have been stipulated. The
stipulated facts and accompanying exhibits are incorporated
herein by this reference.
Petitioners are husband and wife. We hereinafter refer to
Richard D. Irving, individually, as petitioner. At the time of
the filing of the petition, petitioners resided in Eustis,
Florida. During 2000 and 2001, petitioners operated Kingdom
Kreations, an embroidery business specializing in embroidery for
school uniforms. All of petitioners’ business income and
expenses relevant to the instant case relate to their operation
of Kingdom Kreations.
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