Gerald L. and Erma L. Dunnegan - Page 13

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          Jones v. Commissioner, T.C. Memo. 1994-230, affd. without                   
          published opinion 68 F.3d 460 (4th Cir. 1995); see O’Rourke v.              
          Commissioner, supra.                                                        
               Mrs. Dunnegan testified that she was intensely involved in             
          the operation and management of the fireworks businesses.  She              
          spent approximately 25 to 40 hours per week performing services             
          for the Schedule C businesses, such as bookkeeping, placing                 
          orders to suppliers, and packing and shipping orders.                       
          Petitioners listed both Mr. Dunnegan and Mrs. Dunnegan as the               
          proprietors of the fireworks businesses on their Schedules C for            
          1993.  We conclude that both spouses were carrying on the                   
          fireworks business and 50 percent of the net profits and losses             
          from the fireworks businesses should be attributable to                     
          Mrs. Dunnegan for purposes of self-employment tax under section             
          III.  Business Expenses                                                     
               The last issue is whether the $5,000 paid by petitioners to            
          Big Brothers/Big Sisters is deductible as a business expense                
          under section 162 or as a charitable contribution under section             
          170.  Petitioners claim that they are entitled to the deduction             
          for business expense under section 162 for the payments because             
          they were made in exchange for promotional services and labor               
          rendered to J&G Enterprise.                                                 

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