Neal N. and Ruby W. Viar - Page 13

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          car and truck expenses and travel, meals, and entertainment                 
               With respect to the Schedule C utilities expenses disallowed           
          for 1999, petitioners produced substantiating records in the form           
          of utility bills and thereby met the requirements of section                
          274(d) and the regulations.  Sec. 280F(d)(4)(A)(v).  The Court is           
          satisfied from petitioners' records that they incurred ordinary             
          and necessary business-related utility expenses in excess of                
          those allowed by respondent.  Mr. Viar's testimony with regard to           
          the number of telecommunications devices and services he utilized           
          for business was credible.  Some of his utility bills were                  
          missing, but petitioners based their deductions only on the bills           
          provided.  Their receipts reflected over $2,400 in expenses, yet            
          petitioners only deducted one-half of these, adjusting downward             
          in part so as not to include their residential or other                     
          nondeductible phone expenses.  The Court is satisfied that the              
          business utilities expenses documented exceeded the amount                  
          allowed by respondent, and that the amount claimed was                      
          substantiated.  Therefore, the Court allows petitioners to deduct           
          the full amount claimed for utilities on Schedule C of their                
          return for 1999.5                                                           

               5    As noted earlier, respondent allowed the entire amount            
          of $1,300 claimed by petitioners for utilities expenses for the             
          year 2000.                                                                  

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