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categories to report labor expenses.
For 1991, respondent disallowed a claimed deduction for
wages of $600 and allowed petitioner’s claimed payroll expense
deduction of $1,015 and cost of labor, as a cost of goods sold,
of $8,838 in full. As to years 1992 and 1993, respondent
allowed, in full, claimed deductions for wages of $4,583 and
$2,085, respectively. In addition to allowing petitioner’s
claimed payroll deductions for years 1992 and 1993, respondent
credited petitioner an additional $9 and $27, respectively.
Respondent, however, disallowed $169 of petitioner’s claimed cost
of labor, as a cost of goods sold, for 1992. For 1993,
respondent disallowed $62 of petitioner’s claimed outside
services expense deduction.
Reasonable compensation for services actually rendered is
deductible under section 162 as an ordinary and necessary
business expense. See sec. 162(a)(1). It is unclear why
petitioner separated payments made to employees into four
separate categories; nevertheless, we discuss them together as
they clearly refer to payments petitioner made as compensation
for services rendered.
It is respondent’s position that petitioner has duplicated
her 1991 wages expense in amounts previously allowed by
respondent under payroll and cost of labor. Petitioner offered
the testimony of Ms. Sigrist and Ms. Comeau to prove that the
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