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Mr. Black wrote a letter as manager of Robert Thomas
Securities to Lincoln National Insurance canceling a group
medical insurance policy and stating that his business was
renewing a group medical insurance policy with Continental
Insurance.
Special Agent O’Dell stated in his report that Mr. Black
paid a total of $4,371 in health insurance premiums during the
period January through July 1991, before terminating the policy.
During 1992, Mr. Black paid the C.P.A. firm of Martinson,
Newton & Co., C.P.A.s, a fee of $225 for preparing petitioners’
1991 joint return, and for preparing amended joint Federal and
State income tax returns for 1990.
During 1992, Mr. Black paid Bob West a fee of $250 to form
Mr. Black’s North Carolina C-Corporation, Frank Black, Inc.
The notice of deficiency treated both the $225 income tax
return preparation fee and the $250 incorporation fee as
nondeductible expenditures for purposes of respondent’s net worth
computation.
During 1991 and 1992, petitioners made credit card payments
totaling $22,796.48 and $20,320.19, respectively, all of which
payments were treated as nondeductible in the notice of
deficiency.
Petitioners claimed Schedule C, Profit or Loss From
Business, deductions on their 1991 joint return for payments of
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