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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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