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contemporaneous records of the business purpose of those
expenses.
c. Audit of Petitioners’ 1990 Tax Return
Respondent audited petitioners' 1990 return in September
1991. Respondent issued a Request for Payment of $565.56 for
underpayment of estimated tax, $255.46 for late payment of tax,
and $439.59 for interest (a total of $1,260.61) because
petitioners did not pay the amount shown on their return.
Petitioners then paid those amounts to respondent. Respondent
also made several adjustments to which petitioners agreed.
Counting those adjustments, petitioners’ 1990 tax liability was
$31,856.
Petitioners concede that they should have reported that
the $35,000 pension distribution and an additional $5,581 from
petitioner wife's business was income in 1990. Petitioners
concede that they erroneously claimed a dependency exemption
for their daughter, Robin, in 1990, and $22,833 in itemized
deductions for unreimbursed employee expenses and personal
property taxes. After the audit, respondent concluded that
petitioners could deduct $15,316 more in business expenses for
petitioner's law practice than they claimed on their 1990
Schedule E.
Petitioners disagreed with respondent's conclusions for
1990 that: (i) They could not deduct $3,580 for meals and
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