- 12 -
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
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011