- 14 - Nigeria in January of 2002 with the intention of never returning to the United States. See sec. 1.871-5, Income Tax Regs. With respect to Raphael Nwankwo, we conclude that he never intended to become a U.S. citizen and that he abandoned any resident status that he may have otherwise attained in the 3 years prior to his departure. Accordingly, irrespective of our finding that petitioners did provide more than half of his total support in 2002, we must sustain respondent on this issue. 2002 Schedule C Expenses As stated in the notice of deficiency for 2002, respondent disallowed part of petitioners’ claimed Schedule C expense deductions because petitioners failed to “keep adequate records and documentary evidence to substantiate” these expenses. Despite their lack of substantiation, respondent afforded “consideration” for petitioners’ depreciation, and repairs and insurance expenses, allowing petitioners 60 percent of their claim. Respondent, however, disallowed some of petitioners’ deductions for legal and professional fees, travel expenses, employee benefit program expenses, repair and maintenance expenses,“other expenses”, including uniforms and dry cleaning and telephone, and commissions and fees for “lack of adequate records and documentary evidence.” Section 162 allows “as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year inPage: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
Last modified: May 25, 2011