-5-
that IDA paid him compensation of $92,166 in 2001 and $85,918 in
2002. Petitioner reported his compensation from IDA as wages,
salaries, tips, etc. on line 7 of the returns but claimed
deductions for expenses he incurred in the course of performing
services for IDA on Schedules C, Profit or Loss From Business
(Sole Proprietorship). On the Schedules C, petitioner reported
no gross receipts and claimed deductions for the following
expenses:
Expense 2001 2002
Car and truck $4,830 $3,362
Depreciation 518 5,913
Insurance 527 871
Legal and professional 104 85
Office expenses 57 75
Repairs and maintenance 1,446 -0-
Supplies 324 152
Travel 23,532 4,385
Meals and entertainment 3,103 3,810
Utilities 785 1,334
Other expenses 407 785
B. Notice of Deficiency and Concessions by the Parties
In the notice of deficiency, respondent treated petitioner
as an employee of IDA consistent with his reporting the
compensation from IDA as wages, salaries, tips, etc. on the
returns. Respondent disallowed all deductions petitioner claimed
on Schedules C, explaining that deductions for these amount were
not allowed because petitioner had not established that he
incurred, or if he incurred, paid these amounts for ordinary and
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Last modified: March 27, 2008