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Based on petitioners’ substantiation schedule, we find that
petitioners are entitled to a deduction for office expenses in
the sum of $2,429.05.
D. Rental Expenses
Section 162(a)(3) allows a deduction for rentals paid for
the use of property in a trade or business.
On the Schedule C, petitioners claimed a deduction for
rentals in the amount of $18,247. In the petition, they assigned
error to respondent’s disallowance of that amount. On brief,
petitioners claim a deduction for rentals in the amount of
$23,170. Petitioners have not moved to amend the petition to
assert an overpayment in tax. Nonetheless, since respondent has
not objected to the increased claim for a rental deduction on the
ground that petitioners failed to plead an overpayment, we assume
that such overpayment issue was tried by consent of the parties.
See Rule 41(b)(1). In any event, we allow no deduction for
rental payments. The rental expense in question is claimed by
petitioners to represent the rental costs of rooms in which
Randall held financial planning seminars to educate and attract
new clients.
Petitioners’ substantiation schedule directs us to entries
in Randall’s daily planner as substantiation for the entire
$23,170 of alleged rental expense. Randall testified that he
conducted seminars as a way of attracting new clients.
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