Sarah A. Bland-Barclay and Francis Barclay - Page 5




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          deductions consisting of the following amounts, due to lack of              
          substantiation:                                                             
           Amount claimed    Amount allowed      Disallowed                           
          Deduction          on return       per examination       amount             
          Mortgage interest     $4,032            $3,709             1$323            
          Real estate taxes      1,659             1,526              1133            
          Charitable                                                                  
          contributions         12,500            10,694             1,806            
          Unreimbursed                                                                
          employee business                                                           
          expense               216,050            21,734            14,316           
               1    Petitioners were allowed this amount as a deduction on their      
                    Schedule C for office in home.  Respondent determined that 8      
                    percent of petitioners’ home residence qualifies as a home office.
               2    Before application of the 2-percent limitation.                   
          The following combined Schedule C expense deductions of $25,269             
          were also disallowed:                                                       
                                   Amount claimed      Amount                         
               Expense             on return              disallowed                  
               Advertising         $1,500              $1,114                         
               Car and truck       2,790               1,519                          
               Insurance           402                      402                       
               Office              9,700                    9,090                     
               Business use of home-0-                 (455)                          
               Supplies            9,527                    4,470                     
               Utilities           9,894                    8,624                     
               Other                   505                 505                        
               Total                 $34,318               $25,269                    
          Respondent disallowed the above deductions because petitioners              
          failed to show that each claimed deduction was an ordinary and              
          necessary business expense, or because petitioners failed to                
          substantiate payment of each claimed deduction.  Respondent also            
          determined that petitioners were liable for an accuracy-related             
          penalty under section 6662.                                                 





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