Dennis J. and Carol R. Kraus - Page 16




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          regard, petitioner admitted at trial that his employer did not              
          require him to maintain an office in petitioner’s home.                     
               Accordingly, petitioner would be entitled to a home office             
          deduction only if he were found to have a trade or business;                
          i.e., were an independent contractor or self-employed.  Because             
          we have already found that petitioner is an employee of IBC, he             
          is not entitled to claim a deduction for home office expenses.              
          E.  Petitioner’s Entitlement to Certain Schedule C Deductions               
               On the Schedules C of their 1997 and 1998 income tax                   
          returns, petitioners claimed various deductions.  As decided                
          earlier in this opinion, petitioner is not self-employed and thus           
          is not entitled to claim deductions on a Schedule C.  Respondent            
          also contends that petitioners are not entitled to the home                 
          office or Schedule C deductions because of their failure to                 
          substantiate them.5                                                         
               Petitioner maintained computer records on Quicken which were           
          not accepted by respondent as sufficient to establish the                   
          expenses claimed.  In that regard, petitioner apparently did not            


               5 Because of respondent’s concession and because petitioners           
          were found not to be entitled to home office or Schedule C                  
          deductions, petitioners are entitled to the following Schedule A            
          deductions:                                                                 
               Category                 1997      1998     Schedule A                 
               Home mortgage interest  $7,791    $5,266     Line 10                   
               Real property taxes        600       600      Line 6                   
               DMV renewal fees         39        39        Line 8                    





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