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Petitioner used the address of his residence as the business
address of Zomans Productions in 2002.
Petitioner filed for 2002 a Form 1040, U.S. Individual
Income Tax Return, which he prepared using tax preparation
software. Respondent did not receive the 2002 return until April
19, 2004.
On Schedule A, Itemized Deductions, petitioner claimed
deductions for charitable contributions of $3,549 and a
“maintenance fee” of $430. Petitioner also reported on Schedule
A employee business expenses of $3,995.1 Of that amount,
petitioner claimed deductions of $2,892 after taking into account
the 2-percent floor of section 67. In the statutory notice of
deficiency, respondent disallowed for lack of substantiation the
deductions claimed on Schedule A.
On Schedule C, Profit or Loss From Business, petitioner
claimed deductions for: (1) Car and truck expenses of $4,910,
(2) office expenses of $2,715, (3) travel expenses of $1,540, (4)
meals and entertainment expenses of $625,2 (5) other expenses of
$5,200, and (6) home office expenses of $4,030. In the notice of
1During the audit of the return, respondent determined that
the “maintenance fee” of $430 was a miscellaneous itemized
deduction under sec. 67. Therefore, petitioner’s claimed
employee business expenses were increased to $4,425. Of this
amount, respondent determined that petitioner would claim
deductions of $3,322 after applying sec. 67.
2Petitioner claimed meal expenses in the total of $1,250,
which he reduced by 50 percent as required by sec. 274(n).
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