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disallowed in full or in part amounts claimed by petitioners for
cost of goods sold and business expense deductions, as follows:
Item Amount Claimed on Amount Allowed Per
Return Notice of Deficiency
Cost of Goods Sold 1 $274,109 $137,055
Advertising 1,329 0
Car & Truck 8,665 0
Commissions 6,786 0
Depreciation 13,352 13,352
Insurance 4,967 0
Legal & Professional 8,012 0
Office Expense 4,625 0
Rent 31,200 24,000
Repairs 29,652 0
Supplies 46,712 0
Taxes & Licenses 803 0
Travel 8,623 0
Meals 2,006 0
Utilities 9,974 0
Wages 6,721 78,100
TOTAL $457,536 $252,507
1 Petitioners’ return shows this figure as comprising
$50,925 for “Cost of labor” and $223,184 for “Other
costs”.
Additionally, since issuance of the notice of deficiency,
respondent has conceded that petitioners are entitled to deduct
as a Schedule C legal and professional expense $725 paid for
bookkeeping services.
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Last modified: May 25, 2011