Thomas A. Johnson - Page 10

               Respondent concedes a $3,173.21 deduction for credit card              
          service fees and a $30.82 deduction for bank fees, and we find              
          that petitioner paid $279.09 for Ticketline advertising expenses            
          in 1988.                                                                    
               Petitioner argues that he paid $4,545.40 of other Ticketline           
          expenses.  These expenditures related to Finnimore's obligations            
          for items such as office lease payments, car payments, car                  
          insurance, and rent on Finnimore's apartment.  These expenditures           
          were not ordinary and necessary expenses of Ticketline, and we              
          sustain respondent's determination as to these items.                       
          Self-Employment Tax                                                         
               Section 1401 imposes a tax on net earnings of $400 or more             
          from self-employment income, defined as gross income derived from           
          carrying on a trade or business, less allowable deductions.  Sec.           
          1402(a) and (b).  The parties agree that petitioner is liable for           
          self-employment taxes if we find that he had unreported income in           
          1988.  We have so found.  Thus, petitioner is liable for self-              
          employment taxes under section 1401.                                        
          Nutritional Information System                                              
               Around 1987, petitioner began developing a nutritional                 
          information system that he called the "Food Store".  Petitioner             
          envisioned nutritional information stored in a computer to help             
          grocery shoppers select food based on its nutritional value.                
          Initially, petitioner intended to feature the nutritional                   
          information system in his own natural foods store.  Petitioner              

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