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The following claimed Schedule C expenses are not subject to
the substantiation requirements of section 274(d) but are,
nevertheless, deductible only if they are ordinary and necessary
under section 162(a) and not personal expenses under section 262:
Expense 1994 1995 1996
Legal & prof. $ 980.00 $2,920.00 $ 468.54
Office –- –- 125.10
Rent or lease 5,500.00 5,832.62 6,595.00
Supplies –- –- 441.11
Other:
Equipment 751.35 –- –-
Misc. 147.39 1,298.42 90.65
Dues/sub. 770.00 –- 35.32
Shipping –- –- 161.97
For 1994, petitioners deducted legal and professional expenses of
$980. Petitioners submitted copies of canceled checks dated
January 28, 1994, to Pamela Shell in the amount of $180 and
February 22, 1994, to Raymond A. Harris in the amount of $800.
Both checks were signed by petitioner; however, neither check
listed in the memo section the reason or purpose for the payment.
No evidence was presented to show the relationship of the payees
to petitioner’s business activities, or to show that the payments
were incurred in carrying on petitioner’s trade or business.
Thus, the Court holds that these expenses have not been
substantiated under section 162(a) and are not deductible.
8(...continued)
account in a Rule 155 computation.
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