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Proprietorship), for a “Rental Truck & Equip” business, in which
he reported gross receipts or sales of $797,225, cost of goods
sold of $925,500, and other expenses of $25,939. Petitioner
derived the $797,225 gross receipts or sales figure from the Form
1099-MISC issued to him by United Ready Mixed for settlement
proceeds paid in 1992 to the Lurie & Zepeda trust account. Mr.
Binder advised petitioner to report the settlement proceeds as
income on his 1992 return to conform with United Ready Mixed’s
reporting of the payment on Form 1099-MISC.
Petitioner’s 1992 return showed a reduction of income for
cost of goods sold, which included the full amount of the United
Ready Mixed settlement proceeds. Petitioner treated the deposit
of the United Ready Mixed settlement proceeds into Lurie &
Zepeda’s trust account as a “cost of goods sold” on the basis of
Mr. Binder’s advice. Mr. Binder advised petitioner that he was
entitled to a “cost of goods sold” reduction for the amount of
the settlement proceeds because petitioner had not physically
received and did not have access to the proceeds in 1992, which
were being held by Lurie & Zepeda pending resolution of its
attorney’s-fee dispute with petitioner.
Petitioner’s “cost of goods sold” reduction also included an
additional $128,275 of other alleged business costs. The parties
agree that petitioner was not entitled to a cost of good sold
reduction in any amount because, among other things, petitioner
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