Robin Adams - Page 5

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          in the amounts of $6,123 and $3,098 for 1990 and 1991,                      
          respectively.  On the Schedules C attached to his 1990 and 1991             
          returns, petitioner claimed the following deductions with respect           
          to his jewelry design activity:                                             
               Expense                           1990         1991                    
               Advertising                       $113          $67                    
               Car and truck expenses           1,401        1,454                    
               Insurance                          446          427                    
               Office expense                   5,202        4,820                    
               Rent or lease                                                          
               Other business property       4,560        4,572                       
               Supplies                           480          720                    
               Taxes and licenses                  24           24                    
               Travel, meals, and entertainment                                       
               Travel                          679        3,477                       
               Meals and entertainment         327          843                       
               Utilities                        1,228        1,416                    
               Other expenses                                                         
               Contributions                    24          -0-                       
               Shop expenses                 7,850        3,957                       
               Misc. expenses                  960        1,200                       
               Total                       $23,294      $22,977                       
          Petitioner reported gross receipts from his jewelry design                  
          activity of $637 and $528 in 1990 and 1991, respectively.                   
          Petitioner did not report any income with respect to his                    
          correspondence school activity.                                             
               In the notice of deficiency, respondent determined that                
          petitioner's jewelry design activity was not a trade or business            
          or an activity for the production of income.  In the alternative,           
          respondent determined that petitioner failed to substantiate his            
          claimed expenses and failed to establish that any such amounts              
          were ordinary and necessary.  Further, respondent determined that           
          any amounts constituting start-up expenses were to be amortized             
          over 60 months starting in the month the activity opened for                
          business.                                                                   




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