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(about the same time he filed his returns for the years at
issue).
Petitioner utilized numerous items of equipment, tools, and
supplies in his gold mining activity. These items included
dredges, trailers, winches, tools, dive gear, rigging, a 1956
Ford truck, a 1972 Smoker craft, a 1974 Chevrolet van, and a 1978
Toyota. Petitioner performed his mining activity alone using
this equipment.
Petitioner filed his 1994 and 1995 Federal income tax
returns on April 17, 1997. Beginning with the 1994 return,
petitioner reported the income and expenses from his gold mining
activity on Schedule C, Profit or Loss From Business.
On his tax returns, petitioner reported wage income of
$42,701, $74,700, and $87,981, respectively, for 1994, 1995, and
1996. He reported unemployment compensation of $1,930 in 1994,
$460 in 1995, and $690 in 1996, and on Schedules C of his
returns, he reported gross receipts from the sale of gold in the
amounts of $770 in 1994, $1,540 in 1995, and $585 in 1996.
Petitioner claimed depreciation deductions of $14,692 in 1994,
$19,181 in 1995, and $9,181 in 1996. In 1996, petitioner reduced
his gross receipts by cost of goods sold of $585.5 Petitioner
reported net losses from his gold mining activity of $18,164 in
5 A $32,000 cost of goods sold claimed on the 1996 return
and disallowed by respondent was conceded by petitioner.
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