- 2 -
Respondent determined deficiencies in petitioners’ 2000 and
2001 Federal income taxes and accuracy-related penalties as
follows:
Years Deficiency Sec. 6662 Penalty
2000 $22,221 $4,444.20
2001 20,892 4,178.49
The issues are (1) whether petitioners are entitled to
various deductions claimed on Schedule C, Profit or Loss From
Business, for the years in issue, and (2) whether petitioners are
liable for the penalties under section 6662. At the time the
petition was filed petitioners resided in Bowie, Maryland.
Background
The facts may be summarized as follows. Petitioners filed
Federal income tax returns for the taxable years 2000 and 2001.
Each return included a Schedule C for Common Sense Consultants,
Inc. (CSCI),2 and Galaxy 6 (Galaxy). Petitioners reported gross
receipts, cost of goods sold, and deductions for the two entities
as follows:
2000 2001
Galaxy 6
Gross receipts $3,883 $8,240
Cost of goods sold 5,755 -0-
Expenses:
Advertising 82 424
Bad debt -0- 926
Travel -0- 198
2 CSCI was not incorporated.
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Last modified: May 25, 2011