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indicated petitioner paid $500 for her services. The invoice
specifically referenced payment by check No. 6718, which
apparently never cleared petitioner’s bank account. Petitioner
has failed to substantiate his claimed accounting, tax
preparation, and representation fees. Accordingly, the Court
sustains respondent on this issue. Petitioner is not entitled to
a deduction for accounting fees.
F. Cost of Goods Sold
“The cost of goods purchased for resale, with proper
adjustment for opening and closing inventories, is deducted from
gross sales in computing gross income.” Sec. 1.162-1(a), Income
Tax Regs. A taxpayer may also deduct the cost of supplies and
materials consumed in the operation of his or her business during
the taxable year. See sec. 1.162-3, Income Tax Regs.
Petitioner claimed on Schedule C $3,323 for CGS. Respondent
disallowed $659 of petitioner’s CGS. Petitioner asserted that he
purchased the items constituting his CGS for use in his sales
activity for TIG and then provided substantiation for $58.50 in
computer software.20 The remaining items listed as his CGS were
allegedly used in his computer assembly and consulting business,
Computer Consulting Forum Company. Petitioner claimed to have
20Petitioner contended that he purchased a Palm Pilot which
he “used for appointments” that were “related to * * * [his]
business.” Petitioner further testified that the Palm Pilot
“actually got run over by a car and flattened. So it was a total
loss that year.”
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Last modified: November 10, 2007