- 10 -
11/30/95 11/30/96 11/30/97
Food & lodging
Property tax--house $523 $400 $388
Insurance--house -- 120 132
Food for employees 6,724 8,760 8,161
Utilities--house 2,567 2,439 2,557
Depreciation--house 1,667 1,667 1,667
Meals & entertainment1 994 1,338 1,369
Food & lodging expenses 12,475 14,724 14,274
Medical
Medical insurance $2,052 $2,286 $1,586
Medical expenses –- 978 1,985
Medical costs 2,052 3,264 3,571
1The meals and entertainment expenses claimed by
Hillside Dairy included a portion of the Schmidt family’s
dining-out expenses.
2. The Schmidts
The Schmidts timely filed their joint income tax returns for
1995, 1996, and 1997. On these returns, the Schmidts reported
Mr. Schmidt’s wages from Hillside Dairy. They did not report any
income attributable to their food, lodging-related, and medical
expenses paid by Hillside Dairy. They reported Mr. Schmidt’s
income from his separate farming activities as self-employment
income. Mr. Schmidt reported gross income, total expenses, and
net profit from his separate farming activities on Schedule F,
Profit or Loss from Farming, for 1995, 1996, and 1997 as follows:
1995 1996 1997
Gross income $80,928 $50,634 $75,333
Total expenses 73,110 47,791 75,261
Net profit 7,818 2,843 72
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Last modified: May 25, 2011