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On her 1996 Schedule C, petitioner made no entry on line
30 for “Expenses for business use of your home”, nor did
petitioner attach Form 8829, Expenses for Business Use of Your
Home, to her 1996 return.
On part IV of her 1996 Schedule C, petitioner claimed (as
she had on part IV of her 1995 Schedule C) that she drove her
automobile 9,000 miles for business and 3,000 for “other”, for
a total of 12,000 miles for the year.
Respondent commenced an examination of petitioner’s 1995
income tax return no later than June 1997. Respondent
commenced an examination of petitioner’s 1996 income tax return
on July 28, 1998.
In the notice of deficiency, respondent determined that
petitioner underreported gross income on her Schedules C for
1995 and 1996. Respondent also disallowed for lack of
substantiation: (1) The NOL deductions claimed by petitioner
for 1995 and 1996; and (2) the following Schedule C deductions
claimed by petitioner for those years:
1995 1996
Allowed Disallowed Allowed Disallowed
Rent (auto) --- $4,011 --- $3,968
Rent (home office) --- 7,200 --- 4,800
Travel $506 2,765 $506 2,161
Telephone --- 4,848 --- 5,300
Finally, for each of the years in issue, respondent
determined that petitioner is liable for the accuracy-related
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