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issue. On the returns, intervenor indicated he was self-employed
and petitioner was a “homemaker”. On attached Schedules C,
Profit or Loss From Business, intervenor listed himself as the
sole proprietor of an engraving business, which he identified as
“Rocky Creations” on the 2002 Schedule C. On the Schedules C,
intervenor reported net profits from the business activity of
$255 and $6,953 for 2001 and 2002, respectively. Intervenor
reported total taxes of $538 and $982, respectively. Petitioner
did not participate in the making or filing of the returns, nor
did she review them prior to filing. Intervenor signed both his
and petitioner’s names on the returns. However, petitioner would
have signed the returns if intervenor had shown them to her and
asked her to sign.
On February 24, 2005, respondent issued petitioner and
intervenor a notice of deficiency. Respondent disallowed certain
claimed Schedule C expenses, increased Schedule C gross receipts
based on bank deposits and cash expenditures, and increased self-
employment tax. Respondent determined deficiencies in petitioner
and intervenor’s Federal income tax of $22,178 and $8,669 for
2001 and 2002, respectively. Respondent also determined
petitioner and intervenor were liable for accuracy-related
penalties under section 6662(a) of $4,436 and $1,734,
respectively.
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