- 4 -
Gross receipts $2,599
Expenses:
Car and truck $1,067
Office expenses 2,147
Supplies 3,874
Travel 1,780
Meals and entertainment 178
Utilities 762 9,808
Loss $7,209
In the notice of deficiency, respondent disallowed the deductions
for all the expenses for lack of substantiation.
Petitioners did not maintain books and records of their
income and expenses related to this activity. At trial, they
presented what appears to be a computer printout of transactions
involving their distributors along with copies of bank statements
reflecting deposits and checks issued. This information does not
present a complete or even a partial picture of the operation.
It appears, from these records, that the sales activity
operations were commingled with petitioners' personal
transactions. Petitioners produced no records that would
substantiate any of the deductions claimed, nor were any logs
maintained to support the travel and meals and entertainment
expense deductions claimed.
Section 162(a) allows a deduction for the ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on a trade or business. A taxpayer is required to
maintain records sufficient to establish the amount of income and
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Last modified: May 25, 2011