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report income until he received it), yet he accrued expenses
(i.e., he deducted expenses when he became liable for them).
Petitioner has about 8-10 suppliers from whom he buys diesel
fuel, truck parts, and other items for his business. Petitioner
generally pays his suppliers within 30 days.
Petitioner incurred $114,823 of repair expenses for logging
machinery and equipment in 1994. However, because he had a
dispute with one of his suppliers, petitioner paid $51,203 of
that amount in 1994 and $63,620 in 1995.
B. Petitioners’ Tax Returns
Petitioner prepared petitioners’ tax returns from 1951
through the year in issue. He had no professional help in
preparing the 1994 return.
Petitioner reported his logging income for 1994 based on
Forms 1099 issued to him. Petitioner computed his expenses by
totaling his cash payments and check stubs for 1994. Petitioner
reported on his Schedule C for 1994 that he used the cash method
of accounting.
Petitioner deducted $94,723 for repairs and maintenance
expenses in 1994. He arrived at this amount by reducing
$119,723, the amount of expenses he thought he had incurred in
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