Tae M. & Young J. Kim - Page 3




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          Such total wages, tips, and other compensation included $4,234.94           
          that was shown as “ESPP” in Box 14 of the Fannie Mae Form W-2.              
          Fannie Mae also gave Ms. Kim a document entitled “2002 Gross Wage           
          Analysis” (Fannie Mae wage analysis).  That document showed,                
          inter alia, $95,323.62 as “2002 W2 WAGES”.  Such wages included             
          $4,234.94 that was shown as “ESPP-CEP” and “NON-PAYROLL EARNINGS”           
          in the Fannie Mae wage analysis.                                            
               Petitioners timely filed Form 1040, U.S. Individual Income             
          Tax Return, for their taxable year 2002 (petitioners’ 2002                  
          return).  In petitioners’ 2002 return, petitioners showed, inter            
          alia, on page one “Wages, salaries, tips, etc.” of $95,323.62 on            
          line 7.  The $95,323.62 of “Wages, salaries, tips, etc.” included           
          the $4,234.94 that was shown as “ESPP” in Box 14 of the Fannie              
          Mae Form W-2.                                                               
               Respondent issued to petitioners a notice of deficiency for            
          their taxable year 2002 (2002 notice).  In that notice, respon-             
          dent determined a deficiency in, and an accuracy-related penalty            
          under section 6662(a) (section 6662(a) determination) on, peti-             
          tioners' Federal income tax (tax) for that year of $8,411 and               
          $1,682, respectively.  In making those determinations, respondent           
          determined to include in petitioners’ gross income the following            
          amounts:  (1) $21,267 of gross proceeds from certain broker                 
          transactions ($21,267 gross proceeds determination), (2) $622 of            
          interest income from the United States Department of the Treasury           







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