- 5 -
petitioner recorded on Form 4822, and (3) her State tax, FIT, and
FICA withheld from petitioner's salary and subtracted the amounts
petitioner claimed as Schedule C deductions for depreciation and
mileage. According to Ms. Ranew's calculations, petitioner's
expenses exceeded her income by $22,696 in 1993 and $14,021 in
1994.
During the audit, petitioner explained to Ms. Ranew that the
reason she was able to fund expenses in excess of her total
income from all sources was that she had received loans in 1993
and in 1994 from her sister, Mrs. Berry, and from a family friend
Mr. Lewis Peavy (Mr. Peavy). Ms. Ranew contacted both Mrs. Berry
and Mr. Peavy, but neither of them provided Ms. Ranew with any
further details as to the amount or dates of those loans and
neither of them testified at trial.
Subsequently, respondent issued a notice of deficiency
determining deficiencies in petitioner's Federal income taxes in
the amounts of $9,791 for 1993 and $6,876 for 1994. Excepting a
$4,000 deduction for business mileage, respondent disallowed all
of petitioner's claimed business expenses for 1993. Respondent
conceded by stipulation that, for the 1993 taxable year,
petitioner was entitled to additional deductions in the amounts
of $1,089 for Eagle office rent and $111.37 for sales tax paid.
Similarly, respondent disallowed all of petitioner's claimed
business expenses for 1994 with the exception of a $4,000
deduction for business mileage. Respondent conceded by
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