- 15 -
burden of proof except with respect to the fraud penalty. See
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
C. Whether Petitioners May Deduct More for Schedule C Expenses
Than Respondent Allowed
1. Advertising Expenses
Petitioners deducted advertising expenses of $575 for 1999
and $7,500 for 2000 on the Schedules C for petitioner’s
consulting activity. Petitioner testified that the cost of
printing his business cards is deductible as an advertising
expense. However, petitioners did not show how much petitioner
had paid to have business cards printed. Petitioners’ $7,500
advertising expense deduction for 2000 is based on their claim
(which we have rejected) that petitioner paid that amount to
Special Friends. We conclude that petitioners may not deduct any
amount for advertising expenses for 1999 or 2000.
2. Legal and Professional Expenses
Petitioners deducted legal and professional expenses of
$5,500 for 1999, $59,727 for 2000, and $2,000 for 2001 on the
Schedules C for petitioner’s consulting activity. Petitioner
paid $5,500 to the Nelson Hesse law firm for representing him in
his lawsuit against TruGreen. That payment was not related to
petitioner’s consulting activity.2
2 Respondent conceded that petitioners may deduct the
$5,500 payment to the Nelson Hesse law firm as an itemized
deduction for 1999.
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011