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preparing for the New York State licensing examination for
pharmacists.
Petitioner charged students $25 to $35 per hour. Students
paid cash for the tutoring sessions. Petitioner conducted his
activity in a one-bedroom apartment he rented from his father,
Samir Awadallah (Mr. Awadallah), in the Richmond Hill section of
Brooklyn, New York. Petitioner paid Mr. Awadallah monthly in
cash for use of the apartment and utilities. The apartment did
not have a telephone, and the apartment was otherwise unoccupied.
Petitioner did not maintain books and records for the activity.
Petitioner’s mother, Mariem Awadallah (Ms. Awadallah),
performed some secretarial and administrative services for the
tutoring activity. Petitioner paid Ms. Awadallah weekly or
monthly in cash. Petitioner’s students contacted Ms. Awadallah,
who arranged his schedule. Ms. Awadallah performed other duties,
such as copying documents and purchasing materials for repairs to
the apartment.
For tax year 1995, petitioner reported on Schedule C, Profit
or Loss From Business, gross receipts of $4,200 and total
expenses of $22,707. For tax year 1996, petitioner reported on
Schedule C gross receipts of $10,246. Petitioner reported
expenses on Schedule C for tax year 1996 as follows:
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