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7463(b), the decision to be entered is not reviewable by any
other court, and this opinion shall not be treated as precedent
for any other case.
This case arises from respondent’s notice of deficiency for
the taxable year 1998, in which respondent determined a $6,012
deficiency in self-employment tax and a $1,202 section 6662
penalty.
This case involves income Mr. Rusten earned as a consultant
in the railroad business. Mr. Rusten’s consulting activities
were primarily in Canada, and the difficulties in verifying the
expenses Mr. Rusten incurred on behalf of his clients made this
case factually complex. The self-employment tax is the only tax
liability in question because respondent allowed a foreign tax
credit, which eliminated petitioners’2 basic income tax
liability. On the record before us, we must decide: (1) Whether
Mr. Rusten’s self-employment income for 1998 is taxable in the
United States; (2) whether petitioners’ cost of goods sold was
greater than the amount respondent allowed; and (3) whether
petitioners are liable for a penalty under section 6662.
1(...continued)
the Internal Revenue Code (Code) in effect for the year in issue,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
2While Suzan Veronica Rusten is now deceased, references to
“petitioners” are to Robert Louis Rusten and Suzan Veronica
Rusten.
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Last modified: March 27, 2008