- 64 -
respondent conceded that Toraya is entitled to deduct $1,800 as
"Office Expenses" for 1988. The remaining adjustments for
"Office Expenses" for 1988 and 1989 remain in issue.
Petitioners contend that for 1988 and 1989 Toraya is
entitled to deduct as office expenses $7,933 and $12,000,
respectively, that it paid to Motomi to reimburse her for
expenses she incurred in establishing an office in her home at
Nakamura's request. Petitioners maintain that Motomi used the
office, among other things, to reconcile waitress tags to cash
register tapes and to count credit charge slips and record them
on the daily sales registers. Petitioners contend that the
payments were not gifts to Motomi. Petitioners assert that the
payments served a business necessity and that Motomi would be
taxable for the payments, unless she can establish that she may
deduct her home office expenses on the Kudos' tax returns.
Respondent contends that petitioners have failed to
substantiate that the payments to Motomi had a business purpose.
Respondent asserts that petitioners did not establish the
character and dollar amount of Motomi's alleged expenses, that
reimbursement of those expenses was properly authorized by
Toraya, that Motomi accounted for her expenses to Toraya, and
that Motomi was required to work at home. Thus, respondent
maintains, petitioners have failed to establish that the claimed
office expenses are deductible business expenses. Respondent
Page: Previous 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 NextLast modified: May 25, 2011