Bernard Michael Reed - Page 4

               Expense                            Amount Claimed                      
               Car and truck                      $329                                
               Employee benefit program                1,413                          
               Insurance                          1,246                               
               Rental of business property             8,890                          
               Travel                                    515                          
               Utilities                               1,899                          
               Bank service charges                      337                          
               Miscellaneous                           1,241                          
                   Total                            $15,870                          
          On a revised Schedule C dated October 17, 1992, petitioner                  
          increased his deductions for travel expenses claimed to                     
          $5,931.30, and claimed additional expenses for entertainment                
          ($202.94) and meals ($1,014.70).  Petitioner reported no income             
          in 1991 other than the wages and tips he earned while driving a             
          taxi-cab for Whittlesea Cabs.                                               
               Respondent determined that petitioner's business activities            
          were not engaged in for profit, and therefore disallowed all of             
          the deductions claimed attributable thereto.2  Alternatively,               
          respondent determined that petitioner failed to substantiate the            
          deductions and to prove that the expenditures were ordinary and             
          necessary to his businesses. The determinations of respondent               
          are presumed correct, and petitioner bears the burden of proving            
          otherwise.  Rule 142(a).                                                    
               All taxpayers are required to keep sufficient records to               
          enable respondent to determine their correct tax liability.  Sec.           

          2  Although not addressed in the notice of deficiency, respondent           
          also disputes the additional expenses claimed on petitioner's               
          revised Schedule C.                                                         

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Last modified: May 25, 2011