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Petitioners additionally claimed utility expense deductions
in the amount of $142 on line 25 of their 1994 Schedule C. This
amount represented utilities actually used by petitioners at
Villa Cabana.
At trial, petitioner did not offer any testimony which would
indicate any attempt to substantiate petitioners' "other expense"
deductions for the 1994 tax year by contacting petitioners'
former utility, telephone, or credit card companies.
We do, however, find petitioner's testimony credible that
petitioners paid $1,755 a month in rent for commercial space in
San Antonio. We hold that petitioners are entitled to deduct
"other expenses" in the amount of $1,755 for rent expenses
incurred for December of the 1994 tax year. Petitioners are not
entitled to deduct the $1,755 deposit for the last month's rent.
We also find that petitioners incurred utility expenses for
December in the amount of $142 as reported by petitioners on
Schedule C of their 1994 Federal income tax return. Petitioners
cannot deduct utility or telephone deposits made during the 1994
tax year.
e. Insurance
Petitioners contend that they carried a business liability
policy for the years at issue. Though petitioners' 1994
transaction reports list insurance expenses of $479, petitioners
did not claim any deduction for insurance expenses on their 1994
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