- 10 - Notice of Deficiency In the notice of deficiency, respondent disallowed petitioner’s Schedule C bad debt deduction of $20,000 and his Schedule C legal expense deduction of $1,300. As a result of these adjustments, respondent made a computational adjustment reducing petitioner’s itemized deductions by $2,195 but did not otherwise disallow the itemized deductions petitioner had claimed on Schedule A. Respondent did not assert that petitioner was liable for any addition to tax or penalty. Amendment to Answer After respondent uncovered evidence that petitioner had overstated his Schedule A itemized deductions and had falsified documentation to substantiate his Schedules A and C deductions, respondent amended his answer to the amended petition to assert an additional deficiency of $5,784.14 (thereby increasing the total claimed deficiency for 2001 to $10,980.143) resulting from the complete disallowance of petitioner’s itemized deductions for lack of substantiation. Respondent also asserted for the first time that petitioner was liable for the fraud penalty pursuant to section 6663(a). 3In his motion, respondent conceded a computational mistake in calculating the original deficiency. The corrected original deficiency is $5,196.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011