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The deduction for advertising relates to expenditures for 35mm
film, film processing, and photocopying. The deduction for car
and truck expenses relates to mileage driven on a 1993 Mazda MPV,
the cost of which was deducted in a prior year under section 179.
The depreciation and section 179 deduction includes the costs of
the 1993 Pontiac Grand Am, the 1972 Dodge Van, and the computer
printer. The deduction for insurance relates to automobile
insurance on petitioners’ automobiles. The deduction for office
expense includes expenditures for magazine and newspaper
subscriptions. The deductions for rent and utilities relate to
home office expenses. The deduction for taxes and licenses
relates to registration fees for petitioners’ automobiles. The
deduction for other expenses relate to the cost of driving the
Mazda MPV on a trip described by petitioner as follows:
It was a scenic trip, San Diego [where petitioners
lived at the time], customer in Bakersfield, customer
in - - no, that was it, the guy was in Bakersfield.
The guy that had been a diesel engine rebuild mechanic
who gave us a great reference. He was in –- he was
moving to Iowa, so I outfitted him, and that was in
part of the gross sales –- no, wait, I –- he didn’t
have any money, so I sold it to him on credit and never
collected, come to think of it.
The net loss claimed on the Schedule C offset other income
reported on petitioners’ return.
In the notice of deficiency, respondent disallowed the
deduction for the net loss.
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Last modified: May 25, 2011