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Dolphin reimbursed Mr. Ciaravella for his race car
expenditures by making deposits into the checking account of his
sole proprietorship, Innovative. For the years 1992 and 1993,
Mr. Ciaravella reported amounts received from Dolphin on the
Innovative Schedules C as gross receipts from advertising and
also deducted the same amounts as expenses relating to race car
activities on the Innovative Schedules C. He also claimed
depreciation deductions on the race car and the trailer used to
haul the race car and deducted the costs of replacement parts and
maintenance of the car, as well as payments made to Tim Albright,
who was responsible for maintaining the race car and was the head
of the pit crew at the races.
Dolphin also made payments to Innovative for expenses
arising from Dolphin's conventional advertising activities.
Trade publications and magazines, in which Dolphin placed
advertisements, would send their invoices to Dolphin and
correspond directly with Dolphin. However, payments for the
advertising services were made from Innovative's checking account
and were deducted by Mr. Ciaravella on the Innovative Schedules C
for the years 1992 and 1993.
Mr. Ciaravella reported gross receipts and expenses of
Innovative on Schedules C for the years 1992 and 1993 in the
following amounts:
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Last modified: May 25, 2011