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2001 tax years, respondent allowed portions of petitioners’
claimed business expense deductions for supplies and office
expenses but disallowed all others.3 Furthermore, respondent
determined that petitioners are liable for self-employment taxes
of $12,424 for the 2000 tax year and $13,893.57 for the 2001 tax
year. Remaining adjustments set forth by respondent in the
notice of deficiency depend on a Rule 155 computation and need
not be addressed in this opinion.
Petitioner timely petitioned this Court for a
redetermination of the proposed deficiencies.
OPINION
Section 61(a) defines gross income as “all income from
whatever source derived,” including gross income derived from
2(...continued)
receipts as reported by petitioners ($114,589) from gross
receipts as determined by Agent Gomez ($161,796.73).
3Specifically, respondent determined that petitioners
overstated Schedule C business expense deductions as follows:
Amount of claimed deduction
disallowed by respondent
Claimed expenses 2000 2001
Advertising $850 $450
Car and truck expenses 6,890 5,710
Office expenses 3,228 2,983
Rent or lease 15,400 26,400
Supplies 18,678 17,031
Taxes and licenses 100
Meals and entertainment 1,175 1,573
Wages 14,250 30,650
Other expenses 1,225 950
Total 61,796 85,747
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