Ragnhild A. Westby - Page 56

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               (e) For 1989, petitioner documented salary payments of                 
          $22,288.21 (Ex. 40-R, lines 509-532) and daycare expenses of                
          $1,591.80 paid for one of her employees (Ex. 40-R, lines 551-               
          571), the deductibility of which respondent has conceded.                   
               (f) For 1990, petitioner documented salary payments of                 
          $6,658.20 (Ex. 41-R, lines 98-116) and $18,707.32 (Ex. 41-R,                
          lines 856-873), the deductibility of which respondent has                   
          conceded.                                                                   
               Although petitioner did not introduce all of her payroll               
          records into evidence, we are convinced that her failure to do so           
          was more likely than not the result of the sheer volume of                  
          documentation with which she was dealing at trial and the lack of           
          attention paid by both petitioner and respondent to the actual              
          Schedule C categories.  Petitioner, however, credibly testified             
          at trial that she paid salaries, a telephone allowance, life                
          insurance, health insurance, school and summer childcare                    
          expenses, and automobile expenses (including car insurance, a gas           
          allowance, and car payments) to or for the benefit of her                   
          employees during 1987, 1988, and part of 1989.  We also note that           
          the documented amounts if annualized would generate an annual               
          figure consistent with, or larger than, the amounts claimed on              
          petitioner’s Schedules C for the years at issue.  We shall apply            
          the Cohan rule to uphold petitioner’s wage and employee benefits            
          deductions for each of the years at issue.                                  






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