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VI. Schedule E Rental Expenses for 1994.
Petitioner documented taxes of $2,526 on the New Jersey
house, which respondent allowed as a rental expense deduction on
Schedule E. Respondent determined that $13,997 of expenses for
depreciation, repairs, and other expenses disallowed for 1994 as
deductions on property management Schedule C were deductible in
1994 on Schedule E as expenses related to the rental of the New
Jersey house. Aside from his claim that these items were trade
or business expenses deductible on Schedules C for the business
dealing in real estate, petitioner does not challenge these
adjustments. We have found that petitioner and Mrs. Wood are not
dealers in real estate, and, therefore, we sustain respondent on
this issue.
VII. Self-Employment Tax and Net Operating Loss Carryovers
Respondent determined that petitioner was liable for self-
employment tax of $5,902 in 1994, $3,102 in 1995, and $3,626 in
1996 on the net profit from his consulting business and allowed
petitioner a deduction for half of those taxes ($2,951 in 1994,
$1,551 in 1995, and $1,813 in 1996).
Respondent also allowed petitioner a net operating loss
carryover of $18,520 to 1994 from the examination of earlier
years but, on the basis of the adjustments made to 1995,
disallowed the net operating loss carryover of $36,389 petitioner
claimed on the 1996 return.
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