- 11 - fees of $14,500 were reported in 1997. Asked at trial if he paid an attorney $14,500 in legal fees, petitioner replied: “Yes, I did. It wasn’t legal fees--well, most of--about $5,000 of that was legal fees” used to “save my home from being foreclosed.” We uphold respondent’s disallowance of the LLC losses. The next item at issue is petitioner’s entitlement to the deduction of certain business expenses and the subtraction from gross receipts of an amount of cost of goods sold. Petitioner filed a Schedule C in 1995 for a business engaged in “brick and patio construction”. Petitioner subtracted from zero gross receipts cost of goods sold of $13,719 and deducted expenses of $3,500. Respondent disallowed both the cost of goods sold adjustment and the expenses deduction. Expenses which are ordinary and necessary in carrying on a trade or business generally may be deducted in the year in which they are paid. See sec. 162(a). Cost of goods sold is subtracted from gross receipts in determining a taxpayer’s gross income. See Sullenger v. Commissioner, 11 T.C. 1076 (1948). Petitioner provided nothing to support the deductions or the cost of goods sold on the Schedule C. We therefore uphold respondent’s disallowance. We note briefly that the business activity referenced on this Schedule C actually may have been that of a corporation named Simblu Brick & Patio Company. A corporation is a separate legal entity, and an individualPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
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