- 5 - clients, and any further revenue would be divided equally. The business had no office, but petitioner rented a mailbox in Modesto, California, for its use. Clients would pay between $50 and $100 for the housekeeping services with the exception of one client who was a cosmetic surgeon and who rendered payment in the form of breast implant surgery. The cost of goods sold claimed on petitioner’s return in the amount of $750 was the cost of Ms. Castillo’s housecleaning services rendered to clean petitioner’s personal residence “to foster motivation and enthusiasm in Ms. Castillo.” This same expenditure was also claimed as a deduction for wage expense. The advertising expense of $6,000 consists partly of advertising at a bar/restaurant during “Friday night get-togethers with the local crowd” in which petitioner would find out who needed housekeepers. The remainder is non- advertising expense which was categorized improperly. Petitioner also purchased insurance and cleaning supplies for the business, as well as a computer that was used over half the time for business purposes. Finally, petitioner purchased meals while traveling to look for clients. The business was terminated when Ms. Castillo’s boyfriend asked her to terminate her business relationship with petitioner in order to foster their own personal relationship. We find that, at most, petitioner was in the process of starting a business which never materialized. However, assumingPage: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011