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Schedule C was filed for OU rather than for NAFTA. Petitioner
reported Schedule C gross receipts of $116,280 and claimed
deductions totaling $123,040 for various expenses, for an overall
loss of $6,760. One of the expenses claimed as a deduction by
petitioner is in the amount of $17,000 and is described as
“administrative Mexico”.
In the notice of deficiency, respondent determined that
petitioner received $144,102 in unreported income from his
business activities. Respondent calculated this amount as
follows:
Bank deposits $325,155
Less transfers between accounts 26,095
Less line of credit advances 38,678
Less gross receipts reported on return 116,280
Unreported income $144,102
Respondent now concedes that the amount of unreported income
should be reduced by $7,745 to $136,357 to reflect credit card
overdraft transfers into petitioner’s accounts. Respondent also
disallowed in the notice of deficiency the $17,000 deduction
claimed by petitioner as “administrative Mexico”. Respondent
allowed the deductions for each of the other expenses claimed by
petitioner on the Schedule C.
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Last modified: May 25, 2011