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The cost of goods sold items are identified on the Schedules
C as follows:
Item 1989 1990
Purchases $10,760 ---
Subcontract labor 8,853 ---
Cost of labor --- $ 53,300
Materials and supplies --- 73,239
TOTALS $19,613 $126,539
In general, Mr. Womack's customers or clients paid him for
services rendered, principally lawn care services, rather than
for purchases of goods. The record does not indicate that Mr.
Womack's property services business maintained any inventories of
goods or that Mr. Womack sold any goods to his customers,
although he may have made some incidental purchases of trees,
flowers, or grass seed that he planted. Mr. Womack also made
purchases of paints, lawn mowers, rakes, and other tools and
supplies that he and his laborers used in the property services
business. Mr. Womack made purchases of depreciable property for
use in the business in the amounts of $32,313 in 1989 and $87,047
in 1990. Depreciation deductions were claimed in the amounts of
$6,338 and $29,795, respectively, for those years.
Petitioner did not review the 1989 return before signing it,
nor did she question Mr. Womack about it. She assumed it had
been prepared by a capable accountant. Petitioner does not
remember signing the 1990 return but did give Mr. Womack her 1990
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