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On the basis of the record, we find that there is no
credible evidence supporting petitioners' claimed car and truck
expense deductions. We hold that petitioners are not entitled to
claim car and truck expense deductions in the amount of $10,884
for the 1994 tax year.
d. Rent, Utility, and Telephone Expenses
Petitioners claimed "other expense" deductions in the amount
of $4,463 on Schedule C of their 1994 Federal income tax return.
Petitioners' "other expense" deductions included the following
amounts:
Rent expense $3,510
Electricity deposit 800
Telephone deposit 60
Credit card fees 93
Total 4,463
Petitioners’ claimed rent expense deductions for the 1994
tax year also included a payment in the amount of $1,755 for the
last month's rent. Petitioners did not close Villa Cabana until
1997. At the time of trial, petitioner was using the rent
deposit from the restaurant to pay his 1998 personal living
expenses.
Petitioners also claimed deductions for telephone and
utility deposits made during the 1994 tax year. These deposits
would presumably be refunded to petitioners when petitioners
later canceled utility and telephone service to Villa Cabana in
1997.
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