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Miscellaneous Schedules A and C Deductions
On Schedule A, Itemized Deductions, for 1987, petitioners
claimed legal and accounting expenses totaling $160,503 and
subscription expenses of $182.
On Schedule C for 1988, petitioners claimed deductions,
including the following:
Dues and publications $125
Freight 74
Rent 42,185
Travel 49,737
Meals & entertainment 17,962
Utilities & telephone 1,695
Petitioners did not maintain books or records to substantiate the
foregoing expenses.
OPINION
Respondent treated the advances that petitioner received
from the insurance-related entities as income, rather than as
loans. Respondent contends that the fishing activities of
petitioner were disguised as businesses in order to allow
petitioner to deduct for tax purposes his very expensive hobby.
Alternatively, respondent argues that petitioners did not
substantiate the expenses of those activities, particularly the
travel and entertainment and “facility” expenses that were
subject to section 274(d). Respondent contends that the amounts
paid by petitioners in relation to the loan guaranty have not
been substantiated beyond the $7,600 amount supported by
documentation and that, in any event, the amount would be a
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