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the trailer to Frank and Nora Miller (Millers) for about 7
months. The Millers paid petitioners $200 per month rent.
Petitioners filed a joint Federal income tax return for
2002, which included a Schedule A, Itemized Deductions, a
Schedule C, Profit or Loss From Business, and a Schedule E,
Supplemental Income and Loss. Their return was prepared by
Fout’s Accounting Service in Keyser, West Virginia.
On their jointly filed 2002 tax return, petitioners reported
adjusted gross income of $30,878, and claimed Schedule A itemized
deductions of $16,094.
On their Schedule A, petitioners claimed the following
deductions, in pertinent part:
Itemized Deductions Amount
Line 1 Medical and dental expenses $10,723
Line 4 Net medical deduction 8,407
Line 5 State and local income taxes 1,409
Line 6 Real estate taxes 1,303
Line 9 Total taxes 2,712
Line 10 Mortgage Interest 3,083
Line 14 Total interest deduction 3,083
Line 15 Gifts by cash or check 1,642
Line 16 Gifts other than by cash or check 250
Line 18 Total gifts to charity 1,892
Line 26 Net limited misc. deduction 0
Line 28 Total itemized deductions 16,094
Mrs. Butler attached to their 2002 Federal income tax return
a Schedule C. On her schedule C for taxable year 2002, Mrs.
Butler listed as her principal business or profession:
“Respiratory Tech”. She reported $10,510 of business income,
$10,659 in business expenses, and $771 for expenses for business
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Last modified: May 25, 2011