- 3 -
petitioners' residence. Until September 1994, when Mr. Stone
hired a secretary, petitioner Kelly O. Stone (Mrs. Stone) helped
in the business by maintaining the business records and answering
the telephone. Mrs. Stone did not go to the shop; rather, she
performed these activities from petitioners' home. In 1994,
petitioners had four children, Toni, Teni, Tally Jo, and Tucker,
who were ages 12, 9, 7, and 4, respectively.
On their joint 1994 income tax returns (Federal and State),
with regard to the Schedule C for the appliance repair business,
petitioners reported gross receipts in the amount of $82,369 and
a cost of goods sold in the amount of $28,890. Petitioners
claimed a deduction for expenses in a total amount of $42,737.
Petitioners' 1994 Federal and State returns were prepared by Cody
& Co. As a joint project, respondent and the Montana Department
of Revenue audited Federal and State income tax returns that had
been prepared by Cody & Co. The Montana Department of Revenue's
audit of petitioners' 1994 State return resulted in adjustments
to the cost of goods sold and the disallowance of some of the
claimed expenses. The results of the audit were shared with
respondent, and a notice of deficiency was sent to petitioners.
The following shows the expenses petitioners claimed during the
Montana Department of Revenue audit and the amounts that were
allowed by the Montana Department of Revenue and respondent.3
3 All amounts have been rounded to the nearest dollar.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011