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attached to the return, one listing petitioner as the proprietor of
Glass Onion Records ("Businesswoman, Retail Sales, Marketing"), and
the other listing Mr. Edmondson as proprietor of S.M.E. Contracting
Co.4 ("General Contractor"). On the Schedule C relating to Glass
Onion Records, $18,188.01 of expenses was claimed; among other
things, the expenses were with respect to: Debts of Glass Onion
Records prior to its failure; a 1988 trip to Mexico; and
petitioner's education. On the Schedule C relating to S.M.E.
Contracting Co., $19,406.13 of expenses was claimed; among other
things, the expenses were with respect to renovations to the Floyd
Avenue house.
Attached to the Edmondsons' 1988 return was a Form 2119 (Sale
of Principal Residence), wherein $30,948.64 of gain from the sale
of Mr. Edmondson's Seattle house was deferred.
Notice of Deficiency and Amended Answer
Respondent disallowed all deductions claimed on the two
Schedules C on the basis that the Edmondsons failed to establish
that the expenses were deductible under section 162(a). In the
amended answer, respondent asserted that the deferral of the
$30,948.64 gain from the sale of Mr. Edmondson's Seattle house was
erroneous.
4 Except for the 1988 tax return, there is no evidence in
the record with regard to S.M.E. Contracting Co.
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