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Respondent determined the following deficiencies in
petitioners' Federal income taxes and penalties:
Penalty
Year Deficiency Sec. 6662(a)
1990 $3,161 $632
1991 6,003 943
1992 5,284 288
After concessions by the parties,2 the issues remaining for
decision are: (1) Whether petitioners are entitled to a business
bad debt deduction for 1989 under section 166(a) for unpaid loans
to a corporation in which Reza Rezazadeh (petitioner) was an
employee/shareholder and for attorney's fees incurred in attempts
to collect the loan; (2) whether petitioners are entitled to
deductions under section 162(a)(2) for travel expenses incurred
by Connie M. Rezazadeh (Mrs. Rezazadeh) during 1991; (3) whether
petitioners' deduction for 1992 under section 162(a) of inventory
2
Petitioners claimed, on their 1990 and 1991 Federal income
tax returns, deductions for unreimbursed employee expenses in the
amounts of $7,093.04 and $10,274.90, respectively. In the notice
of deficiency, respondent disallowed $3,165 and $8,111 of the
amounts claimed, respectively. In a stipulation of settled
issues (stipulation), petitioners conceded the entire
disallowance for 1990 and $6,585.68 of the disallowance for 1991.
Accordingly, with respect to the deduction claimed for 1991,
$1,525.32 of the disallowance remains at issue, which is issue
number (2) above.
On their 1991 return, petitioners also claimed a deduction
of $466.25 for sales taxes paid on an automobile. In the notice
of deficiency, respondent disallowed the deduction in its
entirety. In the stipulation, petitioners conceded this
adjustment.
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