A.J. Concrete Pumping, Inc. - Page 19




                                       - 19 -                                         
          those repair parts were given to petitioner without consideration           
          or in the form of a loan repayment.                                         
               Petitioner has not shown that the repair parts were                    
          merchandise held for sale to customers in the normal course of              
          its business.  Accordingly, respondent’s determination that                 
          petitioner’s 1992 beginning inventory was overstated is                     
          sustained.                                                                  
          Expense Items                                                               
               A.  Findings of Fact                                                   
               1.  Equipment Purchase                                                 
               During 1991, petitioner purchased equipment from Traylor               
          Brothers for $22,250 and deducted the cost of the equipment on              
          its 1992 tax return.  Respondent determined that petitioner was             
          not entitled to expense the cost of equipment but that the cost             
          should be capitalized and depreciated.7                                     
               2.  Miscellaneous Expense                                              
               For its 1992 tax year, petitioner claimed a deduction for              
          miscellaneous expense items in the total amount of $15,204.                 
          Respondent determined that petitioner failed to establish that              
          the entire amount was for ordinary and necessary business                   
          expenses, disallowing $11,997 of the $15,204 claimed deduction.             


               7 Petitioner claimed depreciation in the amount of                     
          $3,214.29.  Respondent, however, determined that the correct                
          depreciation deduction should have been $4,500.16 and made the              
          necessary upward adjustment.                                                





Page:  Previous  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  Next

Last modified: May 25, 2011