- 8 -
income tax return, petitioners' counsel conceded at trial that
the expense was miscategorized and did not qualify as an
advertising expense deduction.
On the basis of the record, we find that petitioners
expended $1,859 for a sign and hold that petitioners must
capitalize the cost of the sign as a capital expenditure and not
as a Schedule C advertising expense deduction for the 1994 tax
year.
b. Equipment
Petitioners reported equipment costs of $10,000 on Form 4562
for the 1994 tax year and elected to expense that amount under
section 179. Petitioners also claimed depreciation deductions in
the amount of $884 on 3-year property with a depreciation basis
of $2,652. In total, petitioners claimed depreciation and
section 179 expense deductions in the amount of $10,884 for the
1994 tax year.
Petitioners did not claim the $10,884 amount on Schedule C,
line 13, which lists depreciation and section 179 expense
deductions, but did report a $10,884 amount on Schedule C, line
10 entitled: "Car and truck expenses". It is unclear whether
petitioners mistakenly reported the $10,884 amount on the wrong
line of their Schedule C, or whether petitioners are claiming an
additional $10,884 in car and truck expense deductions for the
1994 tax year. Petitioners' car and truck expenses are discussed
in c., infra p. 10.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011