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stopped his membership with the Desert Area Multiple Listing
Service and Board of Realtors. Because Sale By Owner and Far
Western operated under Hugh's brokerage license, his membership
cancellation effectively prevented the two companies from further
operation.
Petitioner substantiated the expense of Sale By Owner and
Far Western by both books and canceled checks. Respondent
asserts that some of the checks paid unrelated personal expenses
of the principals. There are several hundred checks, and
respondent has failed to direct us to the offending ones.
Petitioner has made a prima facie case on this point, and
respondent has offered no countervailing evidence. Petitioner is
entitled to include the losses from Sale By Owner and Far Western
in the calculation of its net operating losses.
In addition to net operating losses, depreciation, and
interest, respondent denied every other deduction petitioner
claimed for 1989 and 1990 on the grounds of lack of business
purpose and lack of substantiation. Respondent has since
conceded some of these other deductions, but $10,454.15 and
$13,848.06 of them for 1989 and 1990, respectively, remain in
controversy. Of these deductions still in controversy,
respondent has admitted that petitioner substantiated a total of
$5,308.89 and $8,062.02 for 1989 and 1990, respectively.
Petitioner has also established that during those years its
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