Charles J. Dugan - Page 14

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          accounting/computer consulting business.  On Schedule C of his              
          1991 return, petitioner reported income totaling $7,195 and                 
          expenses totaling $5,560.  The expenses listed on petitioner's              
          Schedule C are as follows:                                                  
             Car and truck expenses                       $1,950                      
             Depreciation and section 179 expenses1       1,945                       
             Other                                        425                         
             Supplies                                     945                         
             Subscriptions                                295                         
                  Total expenses                          $5,560                      
               1  The sec. 179 expenses petitioner reported were computer             
          expenses.                                                                   
               The parties stipulated that petitioner received $7,195 in              
          gross receipts from his Schedule C business.  The stipulation               
          also reflects that petitioner submitted the following receipts as           
          substantiation for the claimed Schedule C expenses:                         
             Automotive expenses:                                                     
             Gary's Automotive             $848.88                                    
             Computer expenses:                                                       
             Sam's Club                         1,368.85                              
             Software Gallery                   234.32                                
             Other:                                                                   
             Clerk of Superior Court            80.00                                 
             Total expenses                     $2,532.05                             
               Respondent disallowed the claimed expenses on the basis that           
          petitioner failed to establish that they were ordinary and                  
          necessary business expenses, and, further, that some of the                 
          claimed expenses were not substantiated (including satisfying the           
          provisions of section 274(d)).  Petitioner argues that he is                





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