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5. Office Expenses of $6,360
The office expenses listed on the 1992 Schedule C allegedly
consisted of payments to Washoe Association for Retarded
Children, for which petitioner had previously worked as an
employee, of $5,000 for graphics equipment2 and $1,360 for office
supplies. The $5,000 allegedly consisted of a $2,500 lump-sum
payment in cash that petitioner made to the Association and a
$2,500 credit in exchange for his services. Petitioner testified
that he did not include in income the $2,500 credit for services
performed. This was a barter exchange; failing to include the
$2,500 credit in income prevents petitioner from obtaining a tax
basis in the property received and therefore disentitles him to a
deduction for the value of his services or the cost of the
property received. See Barter v. Commissioner, T.C. Memo. 1990-
142; Salon v. Commissioner, T.C. Memo. 1980-77.
We find petitioner's testimony to be generally credible with
respect to his cash payments for the equipment and supplies. We
allow a deduction of $3,860 for the purchase of equipment and
supplies.
6. Travel Expenses of $1,829
Petitioner has completely failed to meet the recordkeeping
and substantiation requirements of section 274(d) for the claimed
2 Respondent did not determine or argue that any payments
that petitioner persuaded the Court he had made should be
capitalized and deducted under sec. 167 or sec. 168.
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