- 3 - Gross receipts $26,864 Less cost of goods sold 13,569 Gross income 13,295 Less expenses: Car & truck $531 Insurance 2,298 Legal 2,000 Utilities 1,764 Casual labor 1,200 Permits 185 7,978 Net profit $5,317 Upon examination respondent disallowed the deductions for legal, utilities, and casual labor expenses and reduced the insurance expense by $1,687. Respondent also reduced the amount of cost of goods sold by $8,000. In addition, respondent made certain mathematical adjustments that flow from the changes in petitioners’ adjusted gross income and are not in dispute. Petitioners concede the adjustments for legal and utilities expenses. Petitioner kept no journal or other books and records. He did maintain a checking account, but the canceled checks were kept by his accountant who had moved to Florida and were unavailable. Petitioner did not issue any Forms 1099 or Forms W- 2, Wage and Tax Statement, with regard to the deductions claimed for casual labor. While petitioner could have obtained records of his payments for insurance, he did not.Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011