- 3 -
Commissioner, 90 T.C. 488, 497 (1988); Cerone v. Commissioner, 87
T.C. 1, 2 n.1 (1986).
The issues remaining for decision are whether petitioners:
(1) Had unreported income from self-employment in 2002 and 2003;2
(2) had unreported income from dividends and capital gains in
2004; (3) are entitled to business expense deductions greater
than those allowed by respondent for 2002, 2003, and 2004; and
(4) are liable for the accuracy-related penalty under section
6662(a) for 2002, 2003, and 2004.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the exhibits received into evidence
are incorporated herein by reference. At the time the petitions
were filed, petitioners resided in Oceano, California.
Timothy Runels (Mr. Runels), during the years at issue,
worked 5 days a week for Luker Framing, a subsidiary of J&S
Lumber. He was also self-employed in the business of repairing
and selling wooden pallets, primarily on Saturdays and Sundays.
In addition, Mr. Runels picked up pallets in the mornings and
evenings during the week.
Emma Valdivieso Runels (Mrs. Runels) was in the bookkeeping
business, working for a certified public accountant (C.P.A.),
2The resolution of this issue and the business expense
issues will also resolve the issue of petitioners’ liability for
and deductability of self-employment taxes.
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