- 5 -
19901 1991 1992 1993
Gross Sales $1,547 $5,427 $5,594 $7,175
Cost of Goods Sold 5,501 4,416 6,079
Income 152 (74) 1,178 1,096
Expenses:
Advertising 122 143 143
Car & Truck 5,010 5,214 5,859
Depreciation 4,632 2,722 3,625
Insurance 308 475 260
Interest - Mortgage 1,312 2,859 -0-
Interest - Other 3,370 2,456 2,144
Office Expense 135 75 283
Legal and
Professional Fees 250 311 425
Repairs/Maintenance -0- -0- 9
Supplies 990 -0- 2,090
Taxes/Licenses 911 1,306 670
Meals/Entertainment 3,042 3,068 3,302
Utilities 1,499 2,201 2,029
Other Expenses 677 692 658
Equipment Rental -0- 127 101
Total 22,258 21,649 21,598
Loss 19,495 222,184 220,471 220,502
1 The record does not contain a detail of the expenses for
1990. We assume that they are generically the same as those
incurred in the later years.
2 We recognize that these amounts do not correspond with the
losses petitioners claimed on their 1991, 1992, and 1993 Federal
income tax returns. This discrepancy, however, is not material
to our decision.
Petitioner enjoys growing plants and working in a garden.
He is not a horticulturist and had no experience in the nursery
business. His concept of an activity making a profit did not
include the cost of land and other indirect costs. In entering
into the nursery activity, petitioner made no financial studies
of the business, other than he thought he could sell the potted
plants for $4 each, and that his cost would be $1.47.
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Last modified: May 25, 2011