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license, sales tax, utilities, rent, advertising and insurance,
professional services, linens and laundry, dues, wages, bank,
auto, phone bill, loan, membership card fee, and miscellaneous.
At the end of the year, Mr. Ngo turned over the business ledger
to his accountant, K.B. Accounting (K.B.), for the preparation of
his income tax return.
Petitioners filed joint Federal income tax returns from 1990
through 1993.
In the notice of deficiency issued to Mr. Ngo, respondent
made the following adjustments to Schedule C deductions by Mr.
Ngo:
1995 1996 1997
ClaimedAllowedDis- ClaimedAllowedDis- ClaimedAllowedDis-
allowed allowed allowed
Advert. $108 $0 $108 -- -- -- $160 $0 $160
Car and3,462 342 3,120 0 422 (422) 2,032 139 1,893
truck
Deprec.12,245 0 12,245 8,746 0 8,746 3,124 0 3,124
Commis. -- -- -- 30 0 30 -- -- --
Insur. -- -- -- 1,738 2,036 (298) 1,535 0 1,535
Legal 600 300 300 -- -- -- 4,861 0 4,861
and prof.
services
Office 43 0 43 0 13 (13) 0 150 (150)
expense
Rent or15,531 15,581(50) 16,97215,520 1,452 16,94511,0675,878
Lease
Taxes 1,412 3,522 (2,110)2,085 2,238 (153) 0 3,097 (3,097)
Travel/10 0 10 -- -- -- -- -- --
Meals/
Entert.
Supplies 2,451 5,407 (2,956) -- -- -- -- -- --
Util. 8,180 5,929 2,251 5,241 5,455 (214) 7,922 2,033 5,889
Salaries/12,000 10,3291,671 12,0008,465 3,535 12,6184,618 8,000
Wages
Other
Expenses 3,548 1,884 1,664 -- -- -- 270 0 270
Dues 0 143 (143) 0 147 (147) 0 900 (900)
Service -- -- -- 0 40 (40) -- -- --
Phone -- -- -- -- -- -- 0 362 (362)
Freight -- -- -- -- -- -- 0 972 (972)
Sign -- -- -- -- -- -- 0 1,719 (1,719)
Repairs/
Maint. 315 0 315 15,860 0 15,860 -- -- --
Total 59,905 43,43716,468 62,67234,336 28,336 49,46725,05724,410
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Last modified: May 25, 2011