Robert J. & Shari L. Hartz - Page 11




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          dispute exists between the parties concerning whether the expense           
          is properly characterized as contract labor expense or wage                 
          expense subject to employment taxes.  Although petitioners raised           
          this as an issue in their petitions to this Court, the parties              
          stipulated that respondent had not issued a notice of                       
          determination concerning this issue and that it is not currently            
          before this Court.  See sec. 7436.  As such, only the amounts               
          paid to the individuals in 1996--not the characterization of the            
          payments--is at issue.  The amount of the payments was not                  
          addressed at trial, however, and nothing was produced to                    
          substantiate any such payments in excess of what respondent                 
          determined had been made.                                                   
               Petitioners have failed to substantiate any of the above               
          alleged expenses as business expenses deductible under section              
          162(a).  Sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs.  We             
          therefore sustain respondent’s disallowance of the deductions               
          therefor.                                                                   
               Finally, petitioner argues that he is entitled to an                   
          additional deduction which he claimed on an amended return form             
          which he filed for 1995.  Petitioner intended to use an amended             
          return to make a variety of changes to amounts of income and                
          deductions reported on the original 1995 return.  These changes,            
          resulting in a reduction of petitioner’s reported adjusted gross            
          income from $80,867 to $11,582, were not accepted by respondent             






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