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demolition, dividing a stall into two foaling stalls, or door and
window repairs.
Petitioner's Record-Keeping Practices
Petitioner did not keep a formal set of books. She would
consolidate her paperwork on summary sheets at the end of the
year or when she prepared her income tax returns. The summary
sheets were prepared from receipts and entries in petitioner's
pocket calendar. After they were consolidated, the records used
to prepare the summary sheets "went into the wood stove". We
found petitioner's testimony to be highly credible.
Petitioner's 1992 Interest Deduction
Petitioner deducted $2,178 as interest expense on a Schedule
C attached to her 1992 Federal individual income tax return.
Respondent admits that petitioner paid $378 to the State Bank of
Standish in 1992 on an installment loan. The proceeds of the
installment loan were used to make some of the repairs described
above on the Whitefeather property. Petitioner paid interest to
the Michigan Federal Credit Union on a loan that was used to
purchase a tractor, a baler, and other farm equipment. However,
the amount of interest paid to the Michigan Federal Credit Union
is not in the record. Petitioner borrowed $8,000 from Michael
Tuffnell in the spring of 1992. No cash payments were made on
the Tuffnell loan in 1992, although petitioner gave Mr. Tuffnell
about $2,500 of hay and straw as payment toward the loan.
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