- 3 - 1995 1996 Gross Income $10,530 $11,580 Less: Insurance $2,320 $2,520 Interest 6,311 5,893 Legal expenses 130 140 Office expenses 291 -0- Repairs 6,450 230 Supplies 16,310 -0- Taxes & licenses 470 -0- Utilities 2,802 -0- Car & Truck -0- 4,464 Wages -0- 568 Other expenses -0- 122,494 Total expenses 35,084 36,309 Loss $24,554 $24,729 1Other expenses consisted of cleaning supplies ($147), tags and licenses ($360), auto parts ($3,657), State inspection ($150), car purchases ($15,420), rental uniforms ($780), and office and car phone ($1,980). Mayo’s Auto Sales began operations in 1989 or 1990, and has never operated at a profit. For the taxable years 1993 and 1994, petitioners reported losses of $14,225 and $16,021, respectively, from this activity. The records of the Virginia Department of Motor Vehicles show that petitioners sold four automobiles during the period of January 1, 1995 through December 31, 1996. Two of those vehicles were sold to petitioners’ relatives. Upon examination of both years respondent disallowed the deductions claimed on Schedule C with respect to Mayo’s Auto Sales on the ground that the activity was not engaged in for profit. With respect to Schedule A, Itemized Deductions, deductions for 1995, respondent disallowed $2,663 of the $6,764Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011