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Respondent determined a deficiency in petitioner’s Federal
income tax of $1,695 for the taxable year 1996.
The issue for decision is whether petitioner is entitled to
deductions for business expenses and to the subtraction from
gross receipts for an amount of cost of goods sold.
Some of the facts have been stipulated and are so found.
The stipulations of fact and the attached exhibits are
incorporated herein by this reference. Petitioner resided in San
Jose, California, on the date the petition was filed in this
case.
During 1996, petitioner earned $55,201 in wages from Applied
Materials, Inc. and Philips Semiconductors, Inc. He also
received $17,727 in pension and annuity income, primarily from
military retirement benefits.
Petitioner filed a Schedule C, Profit or Loss from Business,
with his 1996 Federal income tax return. This schedule listed
petitioner as the proprietor of a housekeeping business named
“Beverly’s Housekeeping”. The following amounts were reported on
the schedule:
Gross receipts $ -0-
Cost of goods sold (750)
Expense deductions
Advertising $6,000
Insurance 775
Office expense 1,045
Supplies 350
Meals and entertainment 437
Wages 750
Total (9,357)
Net loss (10,107)
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