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Procedure. Respondent determined deficiencies in petitioners’
Federal income taxes and penalties as follows:
Taxable Year Deficiency Sec. 6662(a) Penalty
2002 $4,112 $822
2003 8,562 1,712
After concessions,1 the issues for decision are:
(1) Whether petitioners are entitled to claimed dependency
exemption deductions for Raphael Nwankwo and Caroline Nwankwo for
taxable year 2002. We hold that they are with respect to
Caroline Nwankwo and are not with respect to Raphael Nwankwo.
(2) Whether petitioners are entitled to claimed Schedule C,
Profit or Loss From Business, deductions for legal and
professional fees in the amounts of $2,850 and $1,861 for taxable
years 2002 and 2003, respectively. We hold that they are
entitled to deduct legal and professional fees of $105 for
taxable year 2002. We hold that they are not entitled to such
deductions for taxable year 2003.
(3) Whether petitioners are entitled to claimed Schedule C
deductions for travel expenses of $3,202 and $4,102 for taxable
years 2002 and 2003, respectively. We hold that they are not.
1In the 2003 taxable year, respondent also disallowed a
claimed dependency exemption for Raphael Nwankwo. At trial,
petitioners conceded their error in listing Raphael Nwankwo as a
dependent in 2003, as he died in August 2002. Accordingly, this
exemption is no longer an issue.
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