-4-
England on January 6, 2000.3 In Touch’s stated business
objective is to create, protect, and develop the value of
licensing agreements associated with the “ALPHA Critters”. The
ALPHA Critters are cartoon characters of each letter of the
alphabet designed to provide parents and educators a unique and
entertaining alternative to the traditional methods of teaching
children how to read. In Touch commenced the active conduct of
its business on June 1, 2000. At all relevant times, In Touch
used the accrual method of accounting for Federal income tax
purposes.
In Touch timely filed its 2000 Form 1065, U.S. Return of
Partnership Income, in October 2001, pursuant to two extensions
of time to file. On its return, In Touch claimed deductions
totaling $277,560, including $160,000 for consulting fees,
$22,990 for marketing expenses, $59,615 for professional fees,
and a $15,711 amortization deduction.4 In Touch’s 2000 Form 1065
3 Its principal place of business was in Tulsa, Okla., when
the petition in this case was filed.
4 In Touch elected, under sec. 195(b), to amortize startup
expenditures totaling $134,664 for a period of 60 months
beginning in June 2000. The startup expenditures that In Touch
claimed on its 2000 partnership return consisted of marketing
expenses of $17,423, rent of $15,000, printing costs of $111,
bank charges of $20, meals and entertainment of $277, and
consulting fees of $101,833.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: November 10, 2007