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contractor during 1991. Petitioner did not contract out his
services during the taxable year 1991. He reported no income on
the Schedule C filed with his return for 1991.
Respondent in the notice of deficiency to petitioner
disallowed the entire amount of the $23,505 business expense
deduction claimed by petitioner on the Schedule C.
Petitioner filed a Schedule C with his return for the
taxable year 1992, using the same business name as in 1991.
During that year, petitioner listed on his tax return that his
principal business was "personal and financial
services/collection agency". Petitioner reported no income on
the Schedule C for 1992, but he earned between $200 and $400
during the year 1992 from his collection business that he did not
report on his tax return.3
On Schedule C of his Federal income tax return for the
taxable year 1992, petitioner claimed business expense deductions
totaling $7,250. Respondent in the notice of deficiency
disallowed $4,592 of the business expense deductions claimed by
petitioner for 1992. The claimed Schedule C business expense
deductions not disallowed by respondent were:
3 Petitioner testified to these facts but gave no
explanation for his failure to report the income received.
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