- 7 - four referrals in the subscription agreement. Although promotional service program C required petitioners to display and distribute AdaCom brochures and display an AdaCom window decal, petitioner Bruce Channell testified that he did not remember whether he displayed an AdaCom window decal and that AdaCom did not check to see whether he had displayed a window decal or distributed brochures. Petitioners paid AdaCom $2,500 and were credited with $7,750 in promotional services for a subscription to the program for the tax year 2000. AdaCom issued a Form 1099 to petitioners in the amount of $7,750 for the 2000 tax year. This amount represented the alleged bartering income from AdaCom for promotional services and was reported on petitioners’ Schedule C for the taxable year 2000. This was the only income reported on petitioners’ Schedule C. Based on their subscription to the program, petitioners claimed a $5,250 business expense deduction and a $5,000 section 44 credit on their income tax return for 2000. Respondent determined a deficiency in petitioners’ Federal income tax for 2000 in the amount of $1,935. Respondent issued a notice of deficiency which stated: We adjusted your Schedule C, Gross Receipts, and Other Expenses. The adjustments are to decrease income by monies recorded as received from bartering in the amount of $7,750.00, to disallow the advertisingPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011