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petitioners' tax return, Harris Enterprises' income and expenses
for 1992 were as follows:
Income: $18,448
Expenses:
Advertising $5,275
Depreciation 28,280
Insurance 4,475
Mortgage interest 26,874
Office expense 420
Repairs and maintenance 3,408
Taxes and licenses 8,310
Utilities 5,135
Water well replacement 6,500
Gravel parking lot 2,900 (91,577)
Net loss (73,129)
The $18,448 of gross income included approximately $500 from the
occasional rental of the buildings for auctions or flea markets;
the rest of the gross income was attributable to the rent of the
storage units. As to the claimed depreciation, $912 was claimed
on a computer, and the rest was claimed on the buildings.
Petitioners' tax return reports that the computer was purchased
in 1986 at a cost of $6,525, and that the buildings were
purchased in 1986 at a total cost of $520,000.
Respondent determined that petitioners were not entitled to
deduct any of the $42,955 amount claimed for the business
expenses reported as advertising, gravel parking lot, water well
replacement, and depreciation. As to the first three expenses,
respondent determined that petitioners had not established that
those expenses were paid or incurred during the taxable year, or
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