Gregory A. Maslow and Marina Maslow - Page 7

          sales award from Kentucky Central Life Insurance Co.  The fair              
          market value of the trip was $7,220, which was reported to                  
          petitioner on a Form 1099.  Petitioners did not include the value           
          of this sales award in income.  Petitioner claims that the trip was         
          a "company conference" and that he was told by his superiors at the         
          home offices of Kentucky Central Life Insurance Co. that the trip           
          "was fully tax deductible".                                                 
               Except as otherwise provided by law, gross income includes all         
          income from whatever source derived.  Sec. 61.  Gross income                
          includes income realized in any form, whether money, property, or           
          services.  Sec. 1.61-1(a), Income Tax Regs.  Thus, if the taxpayer          
          performs services in exchange for another type of service or                
          receipt of property, then the taxpayer must include in his/her              
          income the fair market value of the services or property received.          
          Sec. 1.61-2(d)(1), Income Tax Regs.  In the instant case, the sales         
          award received by petitioner represents compensation for services.          
          Hence, we hold that petitioner must include the $7,220 fair market          
          value of the trip (not his estimate of what the trip was worth) in          
          income for 1992.                                                            
          Issue 3.  Are Petitioners Entitled to Various Claimed Schedule C            
          Business Expenses That Respondent Disallowed?                               
               Respondent disallowed the following expenses petitioners               
          claimed on Schedule C (Profit or Loss from Business) filed with             
          their 1992 tax return:                                                      

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