The taxpayer reported business income on Schedule C (Profit or Loss from Business) of his 1999 federal income tax return but did not report New Mexico gross receipts tax on this income. In response to the Department’s audit notice, the taxpayer established that some of his sales were made out-of-state. The Department reduced the income subject to tax by that amount, and assessed the taxpayer for gross receipts tax, penalty, and interest on the balance of the business income reported on his Schedule C. At the administrative hearing on the taxpayer’s protest, the taxpayer produced a Form 1099-B evidencing 1999 stock sales of $11,832, and the Department’s attorney stipulated that the Department would abate the gross receipts tax attributable to that amount. The taxpayer also produced an NTTC to support a deduction of receipts from sales of tangible personal property for resale. The hearing officer found that the NTTC was not issued by the right entity and was not of the right type to support the deduction claimed by the taxpayer. The hearing officer also found that while the taxpayer had not provided any evidence to show that his receipts from the stock sales were reported on Schedule C, the Department was bound by its attorney’s stipulation that tax on this amount would be abated. The protest was granted in part and denied in part: the Department was ordered to abate gross receipts tax, penalty, and interest on the taxpayer’s 1999 capital gain; the taxpayer was found liable for the balance of tax, penalty and interest remaining after that adjustment.
Terry R. & Linda A. Wolff