Kathleen A. Carr - Page 6

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          other materials that she used to find out about the latest trends           
          in the entertainment industry and to obtain information about               
          directors, producers, and casting people.                                   
               In 1991, petitioner received wages from Medcom Billing                 
          Services of $25,157.05 and gross income from K.C. & Co. of                  
          $3,229.75.  On the Schedule C, petitioner claimed expenses                  
          related to K.C. & Co. which totaled $26,913.43.  In the notice of           
          deficiency, respondent disallowed all or part of the expenses               
          claimed, as follows:                                                        
               Expense              Claimed       Allowed   Disallowed                
               Advertising         $2,500.00      -0-       $2,500                    
               Union dues          177.50         $147      30                        
               Education           3,752.00       -0-       3,752                     
               Photos              1,800.00       -0-       1,800                     
               Resumes             53.00          -0-       53                        
               Instrument rental   2,593.00       -0-       2,593                     
               Props/sets          4,270.00       -0-       4,270                     
               Education materials    354.75      -0-       355                       
               Airline tickets     1,553.00      1,243      310                       
               Dry cleaning        46.00          -0-       46                        
               Car and truck       3,422.00       2,910     512                       
               In the stipulation of settled issues and the stipulation of            
          facts, the parties stipulated that petitioner was entitled to               
          deduct a total of $3,422 for Schedule C car and truck expenses.             
          At trial, respondent's counsel stipulated that petitioner was               
          entitled to deduct an additional $30 for union dues and $310 for            
          airline tickets.  Therefore, these amounts are no longer in                 
          dispute.5                                                                   

          5  We note that petitioner claimed a Schedule C deduction                   
                                                             (continued...)           




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