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same information with respect to the name of the proprietor,
principal business, business name and address, EIN, accounting
method, and method used to value closing inventory as they had
reported in the 1994 Schedule C. In addition, the 1995 Schedule
C requested, and petitioners provided, inter alia, the following
information:
Information Requested Information Provided
Gross receipts $4,217,062
Returns and allowances 16
Cost of goods sold 2,340,822
Gross profit 1,876,224
Other income --
Gross income 1,876,224
Total expenses 1,973,107
Expenses for business use of your home --
Net profit or (loss) (96,883)
Inventory at beginning of year 442,197
Purchases less cost of items withdrawn
for personal use 1,898,625
Cost of labor --
Materials and supplies --
Inventory at end of year 0
Included in the total expenses reported in the 1995 Schedule
C was automobile depreciation in the amount of $9,400 for peti-
tioners’ two automobiles. Attached to petitioners’ 1995 joint
return was Form 4562. In Part V, Section B of that form, peti-
tioners claimed total miles and total business miles of 5,000
with respect to the Cadillac and 3,000 with respect to the
Corvette. In Part V, Section A of that form, petitioners indi-
cated that they had written evidence to support the claimed
business use of petitioners’ two automobiles.
As of the date of the trial in this case, petitioners had
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