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indemnity obligation that Mr. Cotter owed petitioner under the
Settlement Agreement. The rent owed to Cilena under the
equipment lease was not mentioned in the Settlement Agreement.
On June 30, 1995, petitioner filed his 1993 Form 1040, U.S.
Individual Income Tax Return. Petitioner reported adjusted gross
income of $47,535 ($143,054 wage income, $116 dividend income,
$92,635 business loss, $3,000 capital loss).
On his Schedule C, petitioner reported $2,850 in gross
receipts for consulting services rendered by Cilena. The amount
earned for the consulting services was unrelated to Cilena’s
equipment leasing activity. The following business expenses were
reported on petitioner’s Schedule C:
Item Amount
Legal and professional 1$57,924
Depreciation 20,815
Equipment storage 5,326
Equipment transportation 23,669
Travel 3,104
Security antitheft 2,394
Car and truck 820
Business telephone 733
Office 241
Meals 3160
Advertising 126
Professional publications 108
Repairs and maintenance 65
Total $95,485
1Petitioner concedes that $1,635 of the legal and professional
fees concerned litigation with his former employer, Acuson, and
argues that it should have been reported on his Schedule A, Itemized
Deductions, rather than Schedule C.
2Petitioner concedes that $1,800 in equipment transportation
expenses was not paid until a subsequent year. Accordingly, the
equipment transportation expense at issue is $1,869.
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