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3. Claimed Business Expenses
A. Automobile Expenses
Petitioner had an American Express Corporate Card account,
in the name of “ATN S Khatchatourian” (sic). Credit cards on
this account were issued to Steve, Andy, Roubik Khachatourian
(another brother of Steve’s), Peter Soghomonia, and Carl
Ledbetter. American Express monthly summary statements issued
during 9 of the months of petitioner’s fiscal 1990 show charges
totaling about $15,220.
Petitioner owned a Mercedes 560SL automobile, hereinafter
referred to as the Mercedes. Steve used the Mercedes as his
personal car. Petitioner paid the expenses of the Mercedes.
On its fiscal 1990 tax return, petitioner claimed a $29,877
“car/truck” expenses deduction. In the notice of deficiency,
respondent disallowed this entire amount.
B. Rent Expenses
In 1987, petitioner, Steve, and Andy entered into a lease
agreement under which Steve and Andy leased to petitioner the
land on which petitioner’s truck stop was located. Under this 5-
year lease, petitioner was to pay $5,000 per month rent to Steve
and Andy.
On his 1990 income tax return, Steve reported receiving
$10,000 rent income from petitioner.
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