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Expenses; (3) Schedule C for a “kitchen design” business
attributable to Nancy M. Frederick; and (4) Schedule D, Capital
Gains and Losses. On the Schedule D, petitioners claimed a
$2,000 “non business bad debt”. On the Schedule C, petitioners
reported income of $420, but claimed expenses totaling $12,763,
resulting in a net loss of $12,343. All but $600 of the expenses
are identified and deducted on the Schedule C as “car and truck
expenses”. On the Schedule A, petitioners claimed deductions for
what are described as “Form 2106 (Taxpayer)” expenses of $22,024
and “job hunting expenses” of $3,000.1 The Form 2106-EZ relates
to petitioner’s employment with CSR. On that form petitioners
indicate that petitioner traveled 58,444 miles in connection with
his employment and claimed a deduction for that travel based upon
the standard mileage rate of $0.315 per mile. They also listed
other unspecified “business expenses”, other than expenses for
meals and lodging, of $3,614 on the Form 2106-EZ.
Petitioners’ 1998 return was prepared by petitioner.
Included with that return is a Schedule C for a business named
Morgan Farms, the business of which is described as “raising
seeing eye dogs”. Nancy M. Frederick is identified as the sole
proprietor of Morgan Farms. As noted, one of petitioners’ golden
retrievers is named Morgan. On this Schedule C, petitioners
1 References to deductions claimed on a Schedule A for any
year in issue do not take into account sec. 67.
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Last modified: May 25, 2011