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the proprietor of a business called “Schools and Universities
Research Center” which was engaged in the business of “Education
Research and Publication.” Petitioners reported $1,875 in gross
receipts, and claimed the following deductions for expenses:
Advertising $140
Bad debts from sales or services 15
Car and truck 7301
Commissions and fees 340
Depreciation and sec. 179 expense 5,6822
Insurance 1,082
Interest (other than mortgage) 155
Legal and professional services 192
Office 460
Rent or lease of business property 62
Repairs and maintenance 390
Supplies 175
Taxes and licenses 324
Travel 1,670
Meals and entertainment 227
Utilities 620
Wages 5,388
17,652
1On the Schedule C, petitioners reported business
mileage of 19,900, commuting mileage of 1,500, and other
mileage of 4,400.
2This deduction is related to the use of a computer and
a Ford Ranger. Petitioners claimed 85 percent business
usage with respect to both items. Here, with respect to the
Ford Ranger, petitioners reported business mileage of
19,900, commuting mileage of 1,500, and other mileage of
2,000.
In the statutory notice of deficiency, respondent disallowed each
of these deductions in full and increased petitioners’ income by
an additional $3 to correct a mathematical error petitioners made
in totaling the expenses.
Ordinary and necessary business expenses generally are
deductible in the taxable year in which they are paid. Sec.
162(a). An ordinary expense is one that relates to a transaction
“of common or frequent occurrence in the type of business
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Last modified: May 25, 2011