- 5 - RAF’s accountant showing loans to RAF from Mr. Lenzen and Mr. Schoenecker and RAF’s interest expense on the loans. On February 12, 2003, respondent issued RAF a notice of deficiency disallowing $100,793 of the sales expense deduction. Specifically, respondent disallowed charges of $62,392 on the corporate card, charges of $1,807 on an American Express Corporate Optima Platinum card (Optima card), and a series of miscellaneous expenses totaling $36,594.43 (miscellaneous expenses). Of the disallowed amounts charged to the corporate card, $27,202.50 was charged by Mr. Lenzen, $28,158.09 was charged by Mrs. Lenzen, $5,439.01 was charged by Steven Lenzen, and $1,593.40 was charged by David Lenzen. Respondent has conceded that all the Optima card charges, miscellaneous expenses, and corporate card charges made by Steven Lenzen and David Lenzen were properly deducted and that $7,687 of Mr. Lenzen’s corporate card charges were properly deducted. Respondent maintains that all of Mrs. Lenzen’s corporate card charges, $28,158, and the remainder of Mr. Lenzen’s corporate card charges, $19,516, were for personal expenses of the Lenzens. B. The Lenzens’ 1999 Return The Lenzens filed a joint Form 1040, U.S. Individual Income Tax Return, for 1999. On their 1999 return, the Lenzens reported interest income of $49,598 from RAF. The Lenzens’ 1999 return also indicates that they received gambling income of $17,204 andPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011