- 8 -
1995
Item Amount Claimed Amount Allowed
Cost of goods sold $311,578 -0-
Returns & Allowances 454,387 -0-
Advertising 3,462 $3,462
Insurance 10,809 10,809
Legal & profl. servs. 6,917 6,917
Rent1 43,787 2,150
Repairs 8,574 8,574
Supplies 5,203 5,203
Taxes & licenses 23,995 23,995
Meals/Entertainment 2,852 2,852
Utilities 6,442 6,442
Wages 140,376 140,376
Other expenses2 152,209 152,209
1 On line 20 of the Schedule C, under “Rent or Lease”,
petitioners reported two expenses--$2,150 for vehicles, machinery
& equipment expenses and $41,637 for other business property
expenses.
2 These expenses consisted of $14,306 for payroll taxes,
$4,857 for bank charges, $333 for dues & subscriptions, $876 for
postage, $2,198 for communication radios, $4,619 for shipping/shop
supply, $5,020 for subcontractors, $419 for property taxes, $5,503
for telephone, $30,282 for vehicle expense, $15,558 for SIIS,
$61,183 for other taxes, and $7,055 for tool expense.
At an undisclosed date before July 1998, in conjunction with
preparing a proof of claim in petitioners’ bankruptcy proceeding,
respondent commenced an examination of petitioners’ 1993-95 income
tax returns. Petitioners were notified in writing of proposed
changes to their 1993-95 returns (the 30-day letter).2 The
examination of petitioners’ returns culminated in respondent’s
2 The 30-day letter was also sent to Thomas E. Crowe, Esq.,
counsel for petitioners.
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