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condominium. He reported that his dental equipment was located
at 324 N. Brooks, Brazoria, Texas.
During 1996, petitioner had various personal litigation
matters pending. He also pursued claims of $98, $137, and $105
against three patients. During 1996, he wrote checks to Dale
Morse (Morse) in the amount of $12,656. Petitioner did not issue
a Form 1099 to Morse.
Petitioner’s expenditures during 1996 were spread into
various categories and deducted on his 1996 Federal individual
income tax return, primarily on two Schedules C, Profit or Loss
From Business. Many expenses were mischaracterized. For
example, amounts paid for groceries were deducted as dental
practice postage expenses. All amounts paid on petitioner’s
credit card were deducted by him. Many personal expenses of
petitioner were deducted. Petitioner deducted as “contract
services” payments made to his children in the amount of his
child support obligation. Petitioner’s payments to his children
were not reasonable payments for services rendered by the
children to petitioner’s business. All of the expenses of the
condominium were deducted as dental lab expenses. All of
petitioner’s automobile expenses were deducted as business
expenses. Petitioner did not maintain adequate records of
business use of the automobile or of the business purpose of
travel, meals, or entertainment expense deducted on his return.
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