- 4 -
attorney's questions concerning whether he overreported income by
this amount, petitioner stated: "If this was put on the tax
return, which I understand it was, we overstated it, yes." Based
on the record before us, petitioners have not met their burden of
proof to show that they erroneously reported $5,200 in loan
proceeds as gross receipts.
Issue 2. Schedule C Expenses for the Registry
On the Schedule C for the Registry, petitioners deducted
expenses of over $126,000. Respondent has disallowed $38,271 of
those Schedule C deductions.
Respondent disallowed $8,521, which was deducted as employee
benefits on petitioners' Schedule C for the Registry. Petitioner
agreed at trial that he had no substantiation for $2,168 of this
amount.4 Of the remaining amount, petitioners claim they are
entitled to deduct $4,256 for medical expenses, $1,497 for child
care, and $600 for travel reimbursement.
Medical expenses paid as part of an employee benefit plan
can be deducted as a business expense. Sec. 1.162-10(a), Income
Tax Regs. Of the medical expenses claimed as a business
4On brief, petitioners argue that they actually understated
employee benefits expenses because they failed to take
depreciation on a vehicle they purchased for $28,000. This
depreciation was allegedly not claimed on their return and,
therefore, was not part of the disallowed deduction.
Petitioners' evidence falls far short of showing that the vehicle
was used in their business so as to entitle them to a
depreciation deduction that was not claimed previously.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011