- 5 -
his seminars.3 In arriving at the gross income reported on the
Schedule C, petitioners claimed cost of goods sold in the amount
of $7,030, computed as follows:
Beginning inventory $ -0-
Purchases 8,949
Materials & supplies 1,152
Ending inventory 3,071
Cost of goods sold 7,030
Petitioners also deducted various business expenses on the
Schedule C in the total amount of $11,409, resulting in a net
loss of $11,200.
In the notice of deficiency, respondent made the following
adjustments to the items contained on the Schedule C:
Amount Per
Item Return Adjustment Allowed
Cost of Goods sold $7,030 $7,030 $ -0-
Advertising 1,282 -0- 1,282
Insurance 1,475 1,475 -0-
Legal/Prof. 100 -0- 100
Office Exp. 135 -0- 135
Rent 2,082 2,082 -0-
Repairs & Main. 170 -0- 170
Taxes & Licenses 279 -0- 279
Travel 2,053 2,053 -0-
Utilities 745 -0- 745
Other expenses:
Accounting 128 -0- 128
Trade dues 282 -0- 282
Contrs. 2,187 -0- 2,187
Postage 491 -0- 491
Respondent explained her adjustment to petitioners' cost of
goods sold as follows: "Since you did not establish that the
3Petitioner's records indicate that there were small amounts
of income identified as "misc." or "interest" included in the
gross receipts reported on the Schedule C.
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