Kenneth Lee and Margaret Ihlenfeldt - Page 9

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          determination on this issue.  Petitioner has failed to prove it             
          2.  Self-Employment Expenses                                                
               Section 162(a) lets taxpayers deduct all ordinary and                  
          necessary expenses paid during the taxable year in carrying on a            
          trade or business.  Section 262(a) generally prohibits a taxpayer           
          from deducting personal, living, or family expenses.                        
               Respondent determined that petitioner was not engaged in a             
          trade or business on the Oceanside Blvd. property and disallowed            
          the business deductions which petitioner claimed for expenses               
          related to that property.  Respondent argues that petitioner used           
          the Oceanside Blvd. property only for personal purposes.                    
          We disagree.  We have found as a fact that petitioner operated at           
          least Delta’s business on the Oceanside Blvd. property and that             
          petitioner’s personal use of the Oceanside Blvd. property was               
          limited solely to the apartment.  Although respondent disputes              
          whether petitioner actually worked on the Oceanside Blvd.                   
          property during the subject years, the fact of the matter is that           
          at least Delta’s business was located on the property, and                  
          Delta’s business generated approximately $18,000 of gross                   
          receipts during 1989 through 1991.4  We are confident that                  

               4 We also are mindful of the fact that we have just                    
          sustained respondent’s determination that petitioner failed to              
          report self-employment income for the subject years totaling                

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