Conrad Fitzgerald Lewis - Page 18

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          was derived from her occupation as a cosmetologist/independent              
          contractor.  We therefore conclude that petitioner was the sole             
          proprietor of the business, “Your Future Style”.  Thus, he is               
          entitled to deduct all substantiated Schedule C expenses that               
          were incurred in the operation of the business.                             
               A.  Taxable Year 2000                                                  
               As previously stated, on his Schedule C for taxable year               
          2000 petitioner reported $9,250 of business income from the                 
          business.  Additionally, petitioner deducted $20,387 in business            
          expenses, which resulted in a reported business loss of $11,137.            
               Respondent, in the notice of deficiency, disallowed $6,904             
          of petitioner’s claimed $20,387 business expense deductions for             
          taxable year 2000.                                                          
               On the basis of the record in this case, for the taxable               
          year 2000 petitioner has substantiated, through the phone bills,            
          the utility bills, and his landlord’s letter, business expenses             
          in the following amounts:                                                   
               1.   Rent                          $8,340.00                           
               2.   BellSouth phone expenses      $1,129.70                           
               3.   SCE&G utility expenses       $1,728.21                            
                                   Total    $11,197.91                                
          Petitioner has substantiated Schedule C business expenses for               
          taxable year 2000 of $11,198.  As previously stated, respondent,            
          in the notice of deficiency, allowed petitioner $13,483 in                  
          Schedule C business expenses.  Thus, respondent has allowed a               
          larger amount than petitioner was able to substantiate at trial.            

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