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Expenses:
Car and truck expenses $ 2,224.23
Insurance 613.73
Legal & professional 468.54
Office expense 125.10
Rent or lease (other) 6,595.00
Supplies 441.11
Travel 4,044.61
Meals & Entertainment1 2,453.16
Utilities 665.19
Other expenses2 2,106.53
Total expenses $19,737.20
Net loss ($15,448.20)
1 Fifty percent of $4,906.31 expenses.
2 Consisted of expenses for dues & publications,
lodging, miscellaneous, parking, security, shipping &
postage, and telephone.
In the notice of deficiency, respondent made the following
adjustments to petitioners’ income and expenses for each of the
years at issue:
Adjustments 1994 1995 1996
Schedule C exp. 1$55,766.06 2$38,722.93 3$19,737.20
Unreported income -0- 26,335.72 -0-
One-half SE tax (101.63) (1,913.18) (303.01)
Total adjustments $55,664.43 $63,145.47 $19,434.19
1 In the explanation of items, the disallowed deductions
totaled $55,766.96; however, in the statement of income tax
changes the adjustment to income was $55,766.06. The record
does not contain an explanation for this 90-cent
discrepancy. For 1994, $2,810.25 of the deductions claimed
on Schedule C were allowed and the $55,766.06 total
adjustments shown above for 1994 include $30,634.35 claimed
by petitioner for Los Angeles expenses that he listed on
Schedule C as cost of goods sold.
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Last modified: May 25, 2011