Augusto & Maria Negret - Page 9
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We noted that the tax return showed the $24,855 but did not
show what items were covered by that amount, nor did it indicate
the costs, acquisition dates, and specific business uses of any
of these items. When Maria took the witness stand, we urged her
to testify about the most expensive items first. After Maria
testified about a computer, two desks, a printer, a scanner, a
fax machine, and a telephone, including testimony about these
items’ original costs, aggregating about $4,000, the following
THE COURT: How are you going to get to $24,800
some odd dollars if you’re already getting to shall we
say small potatoes items like $35 items?
THE WITNESS: I don’t have anything to go to
THE COURT: Are there any other big items that you
want to tell us about.
THE WITNESS: No, sir.
Petitioners did not call their tax return preparer to the
witness stand to explain any components of the $24,855 item on
the tax return that she had prepared for petitioners to file.
From the foregoing, we conclude that there was no foundation
for the depreciation claims on petitioners’ 2003 tax return.
Nevertheless: (1) Respondent has conceded that Maria had a
real Schedule C business and agrees that petitioners are entitled
to deduct the net losses from that business against their other
income, see supra table 1; (2) petitioners impressed us as being
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Last modified: March 27, 2008