Earl L. Miller and Nancy B. Miller - Page 7

                                                - 7 -                                                   

                  For the years in issue, the income and expenses incurred in                           
            connection with petitioner's writing activity were reported on                              
            Schedules C as follows:                                                                     
                                                         1993              1994                         
                    Gross receipts                   $1,130.31          $2,510.35                       
                    Expenses:                                                                           
                    Advertising                          ---                 52.06                      
                    Car & truck                        1,731.52          1,854.61                       
                    Depreciation                       3,405.87          6,172.33                       
                    Legal & prof.                        130.00              30.00                      
                    Office expense                     2,267.65            301.58                       
                    Supplies                             641.03          1,335.66                       
                    Travel                             8,213.54          2,348.36                       
                    Meals                              1,177.49          1,907.64                       
                    Other                                863.37          3,285.63                       
                    Net loss                         17,064.66          13,823.70                       

            Petitioners deducted 80 percent of the expenses (including                                  
            depreciation) attributable to the operation of their travel                                 
            trailer in 1993 and 75 percent of the expenses (including                                   
            depreciation) attributable to the operation of their RV in 1994.                            
            Approximately one-half of the expenses attributable to the cruise                           
            were deducted in 1993.                                                                      
                  Petitioner characterized certain travel expenditures as                               
            business related depending upon whether she had spoken with any                             
            editors regarding her destination, whether any interviews were                              
            scheduled or conducted during the trip, and the amount of                                   
            equipment she took along in her camera bag.  Petitioner sometimes                           
            made the decision upon returning from the trip.                                             






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