Roger F. and Carolyn R. Ellis - Page 6




                                        - 5 -                                         
                                        1995           1996                           
               Gross income             - 0 -          - 0 -                          
               Advertising              $53            $82                            
               Car & truck              4,756          4,559                          
               Depreciation             2,431          1,091                          
               Insurance                178            113                            
               Legal & prof. svcs.      139            204                            
               Office expense           799            635                            
               Repairs & maintenance    295            52                             
               Supplies                 325            603                            
               Taxes & licenses         158            121                            
               Travel                   1,100          1,722                          
               Meals & ent. (less 50%)   719           694                            
               Utilities               2,093          2,296                           
               Total loss          13,046         12,172                              
          The Schedules C relate to petitioner’s activities in seeking                
          employment as a consulting engineer.  The deductions claimed for            
          travel and meals include trips taken by petitioner, or                      
          petitioners, to Birmingham, Alabama, Williamsburg, Kentucky, and            
          Columbia, Missouri.  The deductions for utilities relate to the             
          use of a portion of petitioners’ residence as an office.  The               
          deductions for car and truck expenses were computed by using the            
          applicable standard mileage rate.  For each year, petitioner’s              
          records indicate that he typically drove 35 to 50 miles per day,            
          5 days a week, in order to make personal contact with prospective           
          employers.                                                                  
               For each year, petitioners elected to itemize deductions and           
          included a Schedule A, Itemized Deductions, with each return.               
          Among other deductions claimed on the Schedules A, petitioners              
          claimed deductions of $8,328 and $10,827 for 1995 and 1996,                 






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