Ramzy M. and Lena Kopty - Page 4




                                         -4-                                          
          scientific, and technical consulting services to various clients.           
          The Schedules C, Profit or Loss From Business, for petitioner’s             
          sole proprietorship that were filed with petitioners’ returns for           
          1998, 1999, and 2000 are summarized below:                                  
                                       1998                     1999                    2000
          Income:                                                                     
          1 Gross receipts or sales               $114,634                      -0-                     -0-
          2 Returns and allowances                   -0-                              
          3 Subtract line 2 from line 1            114,634                            
          4 Cost of goods sold                       -0-                              
          5 Gross profit, subtract line                                               
          4 from line 3        114,634                                                
          6 Other income                             -0-                              
          7 Gross income.  Add lines 5 and 6       114,634                      -0--0-             
         Expenses:                                                                    
         10 Car and truck expenses2,340                   $2,340.00                $1,270 
         11 Commissions and fees7,900                    8,560.00                 5,330 
         13 Depreciation and section 179             3,756                    3,756.00                 1,430
         expense deduction                                                            
         18 Office expense                           -0-                        667.59                   267
         20 Rent or lease                                                             
         a Vehicles, machinery, and                                                   
         equipment                                                                    
         b Other business property              1,500                   24,931.51                18,670
         24 Travel, meals, and entertainment                                          
         a Travel                              33,288                   10,208.49                 2,450
         b Meals and entertainment $5,000$3,415.00                   $1,760             
         c Enter nondeductible      2,500                  1,707.50                      880
         amount                                                                       
         d Subtract line 24c from               2,500                    1,707.50                   880
         line 24b                                                                     
         25 Utilities                                -0-                      1,744.96                 1,460
         26 Wages (less employment credits)          None                    28,916.44                14,320
         27 Other expenses                                                            
         Telephone                              7,191                   12,588.64                 6,380
         Other misc.                            2,300                      -0-                     -0- 
         Total expenses                      60,775                   95,421.13                52,457
         Net profit or (loss)                53,859                  -95,421.13               -52,457
              Circa June of 1999, petitioner’s wife and children moved                
         from Dubai in the United Arab Emirates to Waterloo, Belgium.                 
         Until sometime during 2000, petitioner’s business activities were            
         based in Dubai, and he retained a residence there.  Between June             
         1999 and the latter part of 2000, petitioner traveled between                
         Belgium, where he and his family resided, and Dubai, where his               
         business activities were centered.  Some of the expenses claimed             







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