- 7 - determined tax deficiencies and penalties with respect to the adjustment of petitioners' deductions for advertising, bad debts, and rent expense. The following explanation of respondent's adjustment to petitioners' advertising expense is provided in the notice: The deductions of $6,448.00, $16,535.00 and $18,141.00 shown on your 1990, 1991 and 1992 returns, respectively, as Schedule C advertising expense are reduced by $3,329.00, $15,600.00 and $17,169.00, respectively, because it has not been established that any amounts more than $3,119.00, $935.00 and $972.00, respectively, were for ordinary and necessary business expenses, or were expended for the purpose designated. Therefore, your taxable income is increased $3,328.00, $15,600.00 and $17,169.00, respectively. Prior to issuance of the notice of deficiency, petitioners conceded liability for the portion of the proposed deficiencies attributable to the bad debts and rent expense adjustments. Petitioners did not concede liability for the accuracy-related penalty under section 6662 with respect to any of the adjustments. Although he is highly educated, petitioner has had no formal training in tax law. Since at least 1990, petitioner has researched income tax issues by reading the Internal Revenue Code, accompanying regulations, case law, and other tax materials such as tax guides. Although petitioner has never sought formal advice from lawyers,Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011