Yung and Anita F. Chong - Page 4

                                        - 4 -                                         
               Back in the United States, Yung was working at his regular             
          full-time job as well as industriously developing ways to make              
          money on the side.  The main focus of his efforts was NuSkin, a             
          multilevel marketing company.  Yung acted as an independent                 
          contractor for NuSkin, incurring various business expenses such             
          as gas, car maintenance and insurance, tolls, and business meals.           
          By his own testimony, Yung was very frugal in his day-to-day                
          expenses:  he scheduled his business meetings to avoid paying               
          multiple tolls; he bought “a few” used cars rather than a new car           
          and got special deals from a mechanic when he needed those cars             
          repaired; and he treated his prospective clients to meals at only           
          inexpensive restaurants.  Yung kept receipts for many of his                
          expenses but, as with Gourmet Down Under, he did not have the               
          sort of systematic records of income and expenses customarily               
          kept by businessmen.                                                        
               In April 1999, Yung filed a joint tax return with his wife,            
          Anita.  They did not use a professional preparer, and claimed               
          more than $40,000 in partnership losses and thousands more in               
          self-employment expenses.  The effect on their tax bill was                 
          dramatic--if allowed, the losses would completely eliminate their           
          combined taxable income.  The Commissioner sent the Chongs a                
          notice of deficiency, denying each of the claimed deductions,               
          stating “it has not been established that the expenses were                 
          incurred and paid during the taxable year.”  The Commissioner               






Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  Next

Last modified: May 25, 2011