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the office of RE/MAX Realtors, located in Farmington,
Connecticut. On Schedule C for the 1993 tax year, petitioner
reported income and expenses as follows:
Amount Total Amount
Income:
Gross receipts $8,638.00
Other income 1,950.00
$10,588.00
Expenses:
Advertising 2,287.65
Bad debts 1,000.00
Depreciation 1,760.00
Employee benefit programs 562.15
Insurance 850.00
Office expense 5,445.55
Pension and profit-sharing plans 525.00
Rent or lease 3,521.23
Repairs and maintenance 874.32
Supplies 743.56
Taxes and licenses 1,515.00
Travel, meals, entertainment 157.14
19,241.60
Net loss 1(8,653.60)
1 Petitioners' return miscalculated expenses as totaling
$18,431.60, resulting in total losses claimed in the amount of
$7,753.60.
In the notice of deficiency, respondent disallowed the claimed
rent expense in the amount of $3,521.23, and the claimed bad debt
deduction in the amount of $1,000.
Section 162(a) provides that there shall be allowed as a
deduction all the ordinary and necessary expenses paid or
incurred during the taxable year in carrying on any trade or
business. Section 6001 requires that a taxpayer liable for any
tax shall maintain such records, render such statements, make
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Last modified: May 25, 2011