- 4 -
The lease was canceled, and Drywall was released from
liability under the lease in return for the payment of $9,996.60
(the lease cancellation fee). The lease cancellation fee was
paid by cashier's check made payable to Marchant. The cashier's
check was purchased by Mr. Finley, either in his individual
capacity or as an officer of a corporation that he controlled.
Mr. Finley delivered the check to petitioner, who in turn
delivered it to Marchant.
Drywall was dissolved on August 31, 1995. Drywall did not
issue stock, conduct an organizational meeting, adopt bylaws, or
file a Federal income tax return. The balance in Drywall's
checking account (petitioner's initial $100 deposit) was
withdrawn by petitioner, and the account was closed.
Petitioner's 1995 Federal income tax return was timely
filed. On a Schedule C included with that return petitioner
reported various items attributable to her self-employment as an
independent sales representative. Relevant for our purposes, on
that Schedule C she claimed a $26,918 deduction for rent on
business property. Of this amount, $15,997 was disallowed in the
notice of deficiency because petitioner "did not establish that
the * * * expense * * * was paid or incurred during the taxable
year and that the expense was ordinary and necessary to * * *
[her] business". Other adjustments made in the notice of
deficiency have been resolved by the parties.
Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011