Karen Ann Keegan - Page 12

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                  Petitioner's claimed expenses for the taxable year 1995                             
            relate to the cost of labor, the cost of materials and supplies,                          
            and "other costs".  We first address petitioner's claims for                              
            expenses relating to labor costs.  Although petitioner kept no                            
            documentation concerning amounts paid by K & A for services                               
            rendered and testified that the amounts reflected on the returns                          
            were estimates, we are convinced that Mr. Gorges and Windi                                
            performed services for K & A and were compensated.  Particularly,                         
            petitioner's lack of drafting experience serves as strong                                 
            indication that she relied upon Mr. Gorges to perform necessary                           
            drafting services.  Moreover, given petitioner's status as a                              
            full-time student during the fall of 1994, we are convinced that                          
            petitioner relied upon Windi to perform various administrative                            
            duties while petitioner was not available.  In return, K & A                              
            provided for a portion of Mr. Gorges' and Windi's living                                  
            expenses.  Employing the rule of Cohan v. Commissioner, supra, we                         
            conclude that petitioner is entitled to a deduction for                                   
            compensation paid to Mr. Gorges and Windi in the amount of $5,000                         
            for 1995.                                                                                 
                 We now address petitioner's claims for expenses relating to                         
            materials and supplies and "other costs" with respect to the                              
            taxable year 1995.  Petitioner testified that, in similar fashion                         
            to the claimed labor expenses, the amounts reflected on her                               
            return as expenses for materials and supplies and for "other                              

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