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6. Insurance Expenses
Petitioner deducted expenses for insurance in 1992 and 1994
in the amounts of $147,2538 and $66,876, respectively.
Respondent determined that petitioner is not entitled to deduct
$3,191 in 1992 and $1,401 in both 1993 and 1994 and disallowed
those amounts.
7. Repair Expenses
Petitioner deducted repair expenses for 1992 in the amount
of $2,825. Respondent determined that petitioner is not entitled
to deduct $1,543 and disallowed that amount.
B. Discussion
1. Equipment Expense
Petitioner deducted, as equipment expenses, $22,250 that had
been paid for equipment purchased in 1992. Respondent disallowed
the $22,250 deduction after it was determined that the purchased
equipment had been included on petitioner’s return as a fixed
asset and depreciation expense claimed in addition to the $22,250
deduction. After examining the fixed asset schedule,
respondent’s agent concluded that the equipment should have been
capitalized rather than expensed.
8 In the notice of deficiency, respondent determined that
petitioner deducted $147,253 for insurance expenses in 1992.
Petitioner’s tax return, however, reflects claimed insurance
expense of $130,213.
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