- 9 - With respect to advertising and supplies expenses, petitioner has not established the business purpose of these expenditures or that they were WTS’s expenses, as opposed to personal expenses or the corporation’s expenses. The same is true for utilities expense. For example, petitioner introduced a number of invoices from AT&T Wireless. The invoices are addressed to petitioner, however, and do not reference WTS. In addition, some of the invoices list petitioners’ home address, while others list the office in Sacramento that WTS shared with the corporation. Petitioner did not introduce evidence linking the telephone number listed on the invoice to WTS, such as a WTS business card or WTS letterhead. Nor did petitioner provide evidence of his personal utilities expense or the corporation’s utilities expense, which may have been circumstantial evidence that WTS used the AT&T Wireless service and incurred the expense in question. WTS paid one-half of the rent for the office space it shared with the corporation. While rent generally is an ordinary business expense, petitioner testified that the office space was “only a professional front” for WTS; i.e., WTS used it solely to meet clients. Given the limited use that WTS made of the office space, as well as the dearth of clients in the years at issue, it appears that this expenditure may not have been a necessary expense. See Alondra Indus., Ltd. v. Commissioner, T.C. Memo.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011