Ibrahim Keita - Page 5

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          84 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440             
          (1934).  The taxpayer is required to maintain records sufficient            
          to enable the Commissioner to determine his correct tax                     
          liability.  Sec. 6001; Higbee v. Commissioner, 116 T.C. 438, 440            
          (2001); sec. 1.6001-1(a), Income Tax Regs.  Such records must               
          substantiate both the amount and purpose of the claimed                     
          deductions.  Higbee v. Commissioner, supra.                                 
          I.   Schedule C Deductions                                                  
               Petitioner claimed a $15,652 Schedule C business loss for              
          2004 that resulted from his deducting $20,548 in business                   
          expenses and reporting $4,896 in income.  The notice of                     
          deficiency disallowed $7,853, the entire amount claimed for                 
          business use of the home, and $3,949 in other expenses claimed              
          for computers, monitors, and a fax machine.                                 
               A.   Business Use of Home                                              
               Section 162(a) allows a taxpayer to deduct all ordinary and            
          necessary expenses paid or incurred in carrying on a trade or               
          business.  The taxpayer is generally precluded from deducting               
          expenses incurred in connection with the business use of the                
          residence.  See sec. 280A.  As an exception to the general rule,            
          section 280A(c)(1) permits the deduction of expenses allocable to           
          a portion of the dwelling unit which was used exclusively and               
          regularly (1) as a principal place of business, (2) as the place            
          for meeting with customers, clients, or patients in the normal              

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