Ronnie O. and G. June Craft - Page 10

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               Petitioner claims that his Schedule C trade or business is             
         “being an employee for livelihood or for profit.”  As                        
         petitioner’s trade or business is being an employee, these                   
         expenses are subject to the 2-percent limitation of section 67               
         and further limitations under section 68.                                    
               D.  Listed Expenses                                                    
               After concluding that petitioner is entitled to deduct                 
         expenses associated with his employment with Craft-Barnett                   
         subject to the limitations contained in sections 67 and 68, we               
         must examine each expense listed by petitioner to determine any              
         further limitation on deductibility.                                         
                    1.  Car and Truck Expenses                                        
               Petitioner is entitled to deduct the expenses listed as car            
         and truck expenses because automobile expenses are specifically              
         listed in the corporate resolution.  Petitioner used his truck to            
         travel from his office to job sites, the bank, and title                     
         companies.  Therefore, petitioner is entitled to deduct the                  
         $2,245.40 of car and truck expenses.3                                        
                    2.  Depreciation Expense                                          
               Petitioner claimed $8,846.98 in depreciation expenses on his           
         2001 return of which $6,760.35 is related to his truck and                   
         $2,086.63 is related to office equipment.                                    

               3  Respondent states that he does not raise the issue of               
          compliance with the substantiation requirements of sec. 274(d),             
          and therefore sec. 274 is not an issue.                                     





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