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Schedule C, petitioner reported, in pertinent part, the following
items of income and expense:
Income:
Gross receipts $ 150
Gross income 150
Expenses:
Car and truck $ 2,802
Depreciation/sec. 179 19,632
Rent or lease 2,100
Travel 1,800
Meals and entertainment1 300
Utilities 1,400
1 Petitioner reported meals and entertainment expenses of
$300 but, pursuant to sec. 274(n)(1), claimed a
deduction for only $150 of such expenses. Under
sec. 274(n)(1), a deduction is allowable for only 50
percent of meals and entertainment expenses incurred.
After deducting various other Schedule C expenses not at issue,
petitioner reported a net loss from Partners of $29,409.
In the notice of deficiency, respondent disallowed three of
the four dependency exemption deductions and determined that
petitioner failed to report gross receipts of $43 in connection
with Partners. Respondent also disallowed the following amounts
of the Schedule C expenses:
Car and truck $ 2,500
Depreciation/sec. 179 17,479
Rent or lease 1,400
Travel 1,800
Meals and entertainment 300
Utilities 180
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Last modified: May 25, 2011