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and petitioners reported the Business' revenue and expenses on
Schedule C, Profit or Loss From Business (Sole Proprietorship).
The Business had $1,275 of gross receipts in 1993. Of the
$24,661 loss reported for the Business, $7,344 was claimed for
seminars and classes ($927), research expenses ($5,152), and
theater review ($1,265). Respondent disallowed petitioners'
claim for the $7,344 amount. As stated in the notice of
deficiency: "Since you did not establish that the business
expense shown on your tax return was paid or incurred during the
taxable year and that the expense was ordinary and necessary to
your business, we have disallowed the amount shown."
Petitioners' 1993 Form 1040 also reports $101,891 in
itemized deductions. Of this amount, $62,545 was claimed for
$66,255 of Mr. Beecroft's employee business expenses.3 The
$66,255 amount was claimed for vehicle expenses ($7,196), travel
expenses, including lodging, airplane, car rental, etc.
($30,434), meals and entertainment ($3,117), and other business
expenses ($26,131). Respondent disallowed the $62,545 amount.
As stated in the notice of deficiency: "Since you did not
establish that the business expense shown on your tax return was
paid or incurred during the taxable year and that the expense was
3 The difference between the $62,545 and $66,255 amounts
reflects the 2-percent limitation on miscellaneous itemized
deductions.
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Last modified: May 25, 2011