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Respondent determined the following deficiencies in
petitioners’ Federal income taxes and penalties for 2002 and
2003:
Penalty
Year Deficiency Sec. 6662
2002 $6,423 $1,284.60
2003 6,702 1,340.40
The issues for decision are whether petitioners: (1) Are
entitled to deductions they claimed on Schedules C, Profit or
Loss From Business, for 2002 and 2003, in excess of those allowed
by respondent, and (2) are liable for accuracy-related penalties
under section 6662(a).
Background
The stipulation of facts and the exhibits received into
evidence are incorporated herein by reference. At the time the
petition in this case was filed, petitioners resided in Houston,
Texas.
Lampanh Pchan (petitioner) was employed as a machinist at
all relevant times. For 2002 and 2003, petitioners jointly filed
Forms 1040, U.S. Individual Income Tax Return, which were
prepared by a tax return preparer. In addition to his regular
employment, petitioner operated his own business. On the 2002
Schedule C for that business, petitioner reported both gross
receipts and gross income of $14,175, car and truck expenses of
$17,739, and other expenses of $10,101. On the 2003 Schedule C,
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