Lee D. and Marjorie L. Hustead - Page 5

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               During the years at issue, petitioners paid professional               
          fees to a land use planning firm and engineers for services such            
          as review of the land use plan, a wetlands survey, and evaluation           
          of sewerability.  Petitioners also paid for legal assistance in             
          their zoning appeal and in negotiating the stipulation.  Other              
          expenditures included payment for repair of a broken floppy disk            
          drive on petitioners' computer and for typing services.                     
          Petitioners used their computer for word processing, to keep                
          business records, and to prepare their tax returns.  In 1992,               
          petitioners used the services of a tax accountant and a tax                 
          lawyer to review their records.2                                            
               Petitioners timely filed U.S. Individual Income Tax Returns            
          for the taxable years 1991 and 1992.  They claimed deductions for           
          LM Development's 1991 and 1992 business activities on Schedules C           
          as follows:                                                                 














          2  Petitioner Lee Hustead so testified without specifying                   
          the amount paid, which on brief petitioners listed as $650.                 




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