David D. Brayshaw and Nora D. Brayshaw - Page 6





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          schedule.  However, because the corresponding deduction on Mr.              

          Brayshaw’s Schedule C has also been disallowed, respondent’s                

          determination must be adjusted to reflect the fact that Ms.                 

          Brayshaw never received the income reported on her Schedule C.              

          Mr. Brayshaw’s Schedule C                                                   

               The second Schedule C listed Mr. Brayshaw as the proprietor            

          of a business engaged in software development.  This schedule               

          listed the following amounts:                                               

               Gross receipts                                                $63,050  
               Returns and allowances                                         (4,928) 
               Expenses                                                               
                    Advertising                                    $1,639             
                    Car and truck                                   1,170             
                    Mortgage interest                               1,771             
                    Legal and professional services                   225             
                    Office                                          2,522             
                    Rent/lease - vehicles, machinery, equipment    13,450             
                    Rent/lease - other business property              195             
                    Repairs and maintenance                         2,055             
                    Supplies                                       11,722             
                    Taxes and licenses                                478             
                    Travel                                          2,697             
                    Utilities                                       3,043             
                    Total expenses                                          (40,967)  
               Expenses for business use of home                             (16,196) 
               Net profit                                                        959  
          At trial, petitioners effectively abandoned the amounts listed on           

          this schedule, instead relying on stipulations and evidence to              

          establish the proper amounts of their deductions.  This one                 

          Schedule C is purported to represent the income and expenses of             

          all three business activities of Mr. Brayshaw.                              

               Mr. Brayshaw’s business activities are rather complex.  He             

          has organized a corporation to conduct one business activity, and           

          he is involved in three other separate and distinct businesses,             







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