- 3 -
reported no gross receipts for the import/export activity and
claimed the following deductions:
1992 1993
Car and truck expenses $13,941 $11,860
Travel 14,889 9,523
Meals and entertainment 1,354 1,354
Other business expenses 5,979 -0-
Telephone 3,956 2,388
Total 40,119 25,125
Petitioner contends that his brother initially paid the bulk
of these expenses and that he later reimbursed his brother. At
trial, petitioner attempted to substantiate, by introducing
copies of traveler’s checks, that he reimbursed his brother.
These copies of traveler’s checks do not indicate that they were
cashed by petitioner’s brother.
Petitioner further asserts that HITC entered into contracts
with agencies of the Government of India to supply the Indian
Government with railroad ties. Petitioner alleges that the
contracts ultimately were canceled because he was unable to
demonstrate to the Government of India and its agencies that HITC
was properly financed.
Respondent determined that petitioners are not entitled to
deductions for the Schedule C expenses they claimed on their 1992
and 1993 Federal income tax returns because petitioners have
failed to demonstrate that the claimed expenses were incurred for
business purposes. Alternatively, respondent determined that
petitioners failed to establish that petitioner was actively
carrying on a trade or business.
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Last modified: May 25, 2011