Alvin S. Kanofsky - Page 4

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          Shirley, Long Island.  Petitioner did not lease any of those                
          properties to tenants during 1996-98.                                       
          Petitioner’s Returns                                                        
               For each year in issue, petitioner filed a Form 1040, U.S.             
          Individual Income Tax Return, showing zero taxable income and no            
          tax due.  On a Schedule C attached to each of those returns,                
          petitioner listed as his principal business or profession                   
          “research and development” and as the name of his business                  
          “A.S.K. Enterprises”.  Only the 1999 and 2000 Schedules C listed            
          a business address, which was 30 E. 3d St., Bethlehem, PA 18015             
          (the Bethlehem property).  All of the Schedules C report zero               
          gross receipts and zero gross income, and they report the                   
          following amounts of total expenses (and resulting losses):                 
                         Year                Schedule C Expenses                      
                         1996                     $72,786                             
                         1997                     75,388                              
                         1998                     80,675                              
                         1999                     85,845                              
                         2000                     80,020                              
          The Notice                                                                  
               The notice disallows all of petitioner’s 1996-98 reported              
          Schedule C expenses and a portion ($33,945 for 1999 and $40,113             
          for 2000) of those expenses for 1999 and 2000.  Those                       
          disallowances are based upon respondent’s determination that                
          petitioner failed to establish that he “incurred or, if incurred,           







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