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In 1992, petitioners claimed a deduction for rental expenses
in the amount of $16,000. Respondent has agreed that petitioners
were entitled to deduct $8,374 of the $16,000 claimed deduction.
Respondent estimated the monthly rental payment to Hub Properties
to be $1,350 on the basis of the prior lease contract adjusted
for an estimated increase. Petitioners presented no
substantiation to reflect the actual payments to Hub Properties.
Respondent allowed 3 months (January to March of 1992) of rental
expenses paid to Hub Properties but disallowed any allowance for
April. On April 29, 1992, petitioners relocated to Rialto
Discount Mall, renting space from April 29 through December 31,
1992. Respondent allowed 6 months of rent based on the amounts
substantiated by checks. The following summarizes respondent's
computations:
Hub Properties: January 1992 $1,350
(no substantiation) February 1992 1,350
March 1992 1,350
April 1992 -0-
Rialto Discount Checks of 1952
Mall 728
728
728
800
388
Rental expenses allowed $8,374
1 The full amount of the check was $1,680, but $728 of the
payment was the security deposit.
Petitioners argue that respondent should have allowed the
April payment to Hub Properties and the missing two monthly
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