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Claimed Adjustment Allowed
Melaleuca Business
Office expenses $3,232 ($3,232) $0
Supplies 885 585 1,470
Meals/Entertainment 1,638 (1,151) 487
Travel expenses 2,835 (1,681) 1,154
Other expenses 7,424 (2,794) 4,630
Musician Business
Advertising 257 4 261
Car/Truck expenses 2,132 (1,548) 584
Itemized Deductions
Miscellaneous 8,915 (197)1 8,718
The notice of deficiency stated that the various business
expenses were disallowed because it had not been established that
each amount “was for an ordinary and necessary business expense,
or was expended for the purpose designated.”
Section 162(a) allows a deduction for the ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on a trade or business. Personal, living, and family
expenses, however, generally are not allowed as deductions. See
sec. 262.
A taxpayer is required to maintain records sufficient to
establish the amount of his income and deductions. See sec.
6001; sec. 1.6001-1(a), (e), Income Tax Regs. In the event that
a taxpayer establishes that a deductible expense has been paid
but is unable to substantiate the precise amount, we generally
may estimate the amount of the deductible expense, bearing
1This adjustment was computational and is not disputed by
petitioners.
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Last modified: May 25, 2011