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examination or at trial to show whether the $5,000 was expended
during the year for expenses already taken into consideration or
how the $38,000 line of credit was used.
Respondent’s determination of unreported gross receipts for
2003 is sustained.
Dividends and Capital Gains in 2004
Petitioners dispute the dividends and capital gains
determined for 2004. The only evidence presented on the issue,
however, was the American Funds of the Investment Company of
America statement to them reporting a capital gain of $246.67 and
total dividends of $358.90 for 2004. Respondent’s determinations
on these issues are sustained.
Schedule C Expenses
Section 162 generally allows a deduction for ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on a trade or business. Generally, no deduction is
allowed for personal, living, or family expenses. See sec. 262.
The taxpayer must show that any claimed business expenses were
incurred primarily for business rather than social reasons. See
Rule 142(a); Walliser v. Commissioner, 72 T.C. 433, 437 (1979).
To show that the expense was not personal, the taxpayer must show
that the expense was incurred primarily to benefit his business,
and there must be a proximate relationship between the claimed
expense and the business. See Walliser v. Commissioner, supra.
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Last modified: March 27, 2008