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Petitioner’s Federal Income Tax Return
Petitioner timely filed a Federal income tax return for
2001, but she did not report the $160,000 payment. Mr.
Pettegrove, who occasionally assisted petitioner in legal matters
and in the preparation of her tax returns, prepared her 2001
Federal income tax return. Mr. Pettegrove is admitted to
practice before the Tax Court.
Petitioner provided Mr. Pettegrove with the Form 1099-MISC
that she received from PCI and her other tax documents. The Form
1099-MISC was in the total amount of $162,662.71, including the
$160,000 payment and $2,662.71 for the value of a computer given
to petitioner. Petitioner acknowledged receipt of the computer,
but she and respondent agree that its value was $400.
Mr. Pettegrove asked for no corroboration or substantiation
from petitioner or PCI to show that the $160,000 payment was a
gift. Other than his conversations with PCI representatives and
petitioner, Mr. Pettegrove made no independent determination of
whether the $160,000 payment was a gift or a bonus.
Mr. Skone, PCI’s accountant, helped petitioner prepare her
State tax return. Petitioner reported the $160,000 payment in
the category of “Services & Other Activities” on the State tax
return. Petitioner paid the Washington State tax due with the
return. Petitioner wrote “taxes” in the memo line of this check
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Last modified: March 27, 2008