- 6 -
Net Profit (13,368) 2,298 (13,023) 6,1501 (4,607) 4,995
Pre-Pals
1 No explanation was given for the mathematical discrepancy.
Respondent's auditor reduced/disallowed the amounts claimed by
petitioners primarily on the basis of failure to substantiate. In
some instances, the amount was reduced/disallowed on the basis that
either the expenditures involved were personal in nature or
petitioners failed to indicate the reason the expenditures were
claimed.
Miscellaneous Employee Business Expenses
For each of the years under consideration, petitioners claimed
a deduction for miscellaneous employee business expenses on
Schedule A of their tax returns. The following table shows the
items of expenses claimed by petitioners, and the amounts allowed
by respondent, for each of the years under consideration:
1989 1990 1991
Reported Allowed Reported Allowed Reported Allowed
Auto $ 7,020 0 $ 7,020 0 $ 7,020 0
Other asset-- 119 $ 775 6,015 $ 1,632 43 $ 1,459
depreciation
Office expenses 8,252 0 18,922 0 0 0
Promotion 1,962 0 0 0 0 0
Storage and rent 18,400 0 18,340 0 18,340 0
Equipment 8,000 0 0 0 0 0
Conferences 13,764 0 10,349 0 0 0
Legal & accounting 16,610 19,916 2,665 4,080 39,281 27,980
Advertising pamphlet 6,750 6,750 0 0 0 0
Tax return prep. 689 639 0 0 0 685
Dues & pubs. 0 0 2,567 0 840 0
Maintenance 0 0 3,668 0 4,026 1,461
Education 0 0 0 0 6,257 0
Leasehold impr. 0 0 12,500 19,616 12,500 19,287
Moving 0 0 0 0 2,212 0
Total 81,566 28,080 82,046 25,328 90,519 50,872
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Last modified: May 25, 2011