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claimed a depreciation deduction of $3,4792 for the business use
of his 2001 Ford Taurus SES (Ford Taurus). Petitioner did not
elect to amortize these deductions as startup expenditures under
section 195(b).
In September 2005, respondent initiated an audit of
petitioner’s 2003 return. As part of the audit, respondent
requested petitioner to provide documentation to substantiate the
Schedule C car and truck expense of $3,977, the labor expense of
$7,070, and the depreciation deduction of $3,479 (business
deductions at issue).
At a meeting, on October 4, 2005, between respondent’s and
petitioner’s representatives, petitioner’s representative3 did
not provide any documentation to substantiate these deductions or
to show petitioner was carrying on a computer software business
in 2003. On October 24, 2005, petitioner provided respondent
with documentation in an attempt to substantiate the Schedule C
car and truck expense and the depreciation deduction but provided
no documentation to substantiate the labor expense or to show he
was carrying on a computer software business in 2003.
2 The deprecation deduction of $3,479 was determined using
the 200 percent declining balance method and half-year
convention. See sec. 168(b), (d).
3 Petitioner’s representative was not an enrolled return
preparer, did not sign as a preparer on petitioner’s 2003 return,
and was not admitted to practice before the Tax Court.
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Last modified: November 10, 2007