- 13 -
Supplies 31 616 179
Milk expense 391 -- --
Custom hire 2,188 1,068 3,476
Depreciation 20,910 14,293 11,986
Rent -- 8,260 9,456
Taxes 1,929 1,857 398
Total 63,381 54,652 155,388
1 The parties have stipulated that respondent determined
that petitioner incurred allowable expenses totaling $55,389 in
1992. The $1 overstatement is due to rounding. For purposes of
this opinion, we shall use $55,389 as the amount of petitioner’s
1992 allowable expenses.
Capital Loss
On his 1991 Federal income tax return, petitioner claimed a
$31,000 loss. On Form 4797, Sales of Business Property,
petitioner reported that the farm was sold for $75,000 on January
20, 1991. Form 4797 also shows that petitioner’s basis in the
farm property was $106,000. Respondent disallowed the claimed
loss and increased petitioner’s taxable income by $31,000.10
Investigation
Petitioner did not submit any books or records to
respondent’s agents during the course of the examination of his
income tax returns. During the examination, respondent requested
the production of certain documents regarding an investigation of
petitioner from Ms. Shirley Harrell, an H&R Block employee.
Petitioner contacted Ms. Harrell after she received the request
10 Respondent’s notice of deficiency shows this item as an
increase in income with no explanation.
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