- 4 -
Claimed
Deduction per return Allowed Disallowed
Advertising $1,340 $511 $829
Car and truck 8,840 -0- 8,840
Depreciation &
Sec. 179 exp. 10,260 3,205 7,055
Insurance 250 250 -0-
Legal & prof. 1,750 1,750 -0-
Office expense 200 200 -0-
Repairs 425 425 -0-
Supplies 660 660 -0-
Travel 3,182 2,451 731
Meals & enter.
$4,871 x 50% 2,435 1967 1,468
Utilities (phone) 635 635 -0-
Wages 2,340 -0- 2,340
Total $32,317 $11,054 $21,263
1Respondent conceded that petitioner substantiated meal and
entertainment expenses of $1,933.62. After applying the sec.
274(n) limitation, the correct deduction for meals and
entertainment appears to be $967, not $911. We have adjusted the
figures above accordingly.
We address each of the remaining disputed adjustments and
the applicable legal principles below.
In General
Ordinarily, a taxpayer is permitted to deduct the ordinary
and necessary expenses that he pays or incurs during the taxable
year in carrying on a trade or business. See sec. 162(a). A
taxpayer is required to maintain records sufficient to establish
the amount of his deductions. See sec. 6001; sec. 1.6001-1(a),
Income Tax Regs.
When a taxpayer establishes that he paid or incurred a
deductible expense but does not establish the amount of the
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Last modified: May 25, 2011