- 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 byPage: 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