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amounts of their compensation were not included under payroll
expense or cost of labor. Respondent argues that the amount
shown in the Form 1099 Ms. Sigrist received was already included
under cost of labor. Petitioner offered no evidence to
substantiate the 1992 cost of labor deductions.
Petitioner has the burden to substantiate the claimed labor
expenses. See Rule 142. She has failed to do so. Petitioner
submitted receipts which do not appear to concern wages, payroll,
outside services, or cost of labor categories. The few receipts
submitted do not approach the amounts claimed on petitioner’s
returns and only add to the confusion. Contrary to petitioner’s
argument, the witnesses at trial could not corroborate who worked
on which project and whether the respective witness ever received
payment for services rendered.
Respondent is sustained on this issue.
2. Cleaning Supplies/Materials and Supplies (Cost of Goods
Sold)
Respondent disallowed deductions for cleaning supplies
expenses of $949 and $3,978 for 1991 and 1993, respectively.
Respondent further disallowed materials and supplies, as a cost
of goods sold, of $1,516 and $2,875 for 1991 and 1992,
respectively. Respondent contends that petitioner claimed
amounts for personal items in addition to business supplies.
Petitioner contends that only expenses for cleaning supplies from
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