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After concessions by the parties, the issues for decision
are:
(1) Whether petitioners are entitled to bad debt deductions
of $34,500, $34,000, and $35,000, for 2001, 2002, and 2003,
respectively;
(2) whether petitioners are entitled to deductions for
advertising expenses of $1,500 and office expenses of $2,500 in
2001; and
(3) whether petitioners are liable for the accuracy-related
penalties for the years in issue.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference.
Petitioners resided in Babylon, New York, at the time that they
filed the petition.
During the years in issue, Joseph Schnell (petitioner) was a
plumber, and Marlene Schnell (Schnell) (collectively,
hereinafter, referred to as petitioners) was a legal secretary.
Petitioners are cash basis taxpayers.
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