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In 1992, petitioners disassociated themselves from the church
and began renting the trailers to individuals seeking weekend
getaways. Petitioners failed to obtain the requisite permits or
business licenses for this activity.
Petitioners’ rental activities (which for the years in issue,
petitioners listed as a “consulting” activity) never generated a
profit. The following chart sets forth the revenues and expenses
from petitioners’ rental activities between 1992 and 1996:
Year Revenues Expenses
1992 $7,200 $16,767
1993 1,225 11,810
1994 500 3,967
1995 1,200 13,041
1996 11,200 28,379
The record does not reveal the revenue and expenses from
petitioners’ rental activities prior to 1992.
Miscellaneous
During the years 1992-1996, the revenues from petitioners’
Schedule C activities totaled $27,635; whereas, the claimed
expenses from these activities totaled $484,374.
On their 1995 and 1996 Federal income tax returns, petitioners
reported the following income and Schedule C losses:
Year Income Schedule C Loss
1995 $174,761 $102,845
1996 181,678 120,278
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