-4-
scientific, and technical consulting services to various clients.
The Schedules C, Profit or Loss From Business, for petitioner’s
sole proprietorship that were filed with petitioners’ returns for
1998, 1999, and 2000 are summarized below:
1998 1999 2000
Income:
1 Gross receipts or sales $114,634 -0- -0-
2 Returns and allowances -0-
3 Subtract line 2 from line 1 114,634
4 Cost of goods sold -0-
5 Gross profit, subtract line
4 from line 3 114,634
6 Other income -0-
7 Gross income. Add lines 5 and 6 114,634 -0--0-
Expenses:
10 Car and truck expenses2,340 $2,340.00 $1,270
11 Commissions and fees7,900 8,560.00 5,330
13 Depreciation and section 179 3,756 3,756.00 1,430
expense deduction
18 Office expense -0- 667.59 267
20 Rent or lease
a Vehicles, machinery, and
equipment
b Other business property 1,500 24,931.51 18,670
24 Travel, meals, and entertainment
a Travel 33,288 10,208.49 2,450
b Meals and entertainment $5,000$3,415.00 $1,760
c Enter nondeductible 2,500 1,707.50 880
amount
d Subtract line 24c from 2,500 1,707.50 880
line 24b
25 Utilities -0- 1,744.96 1,460
26 Wages (less employment credits) None 28,916.44 14,320
27 Other expenses
Telephone 7,191 12,588.64 6,380
Other misc. 2,300 -0- -0-
Total expenses 60,775 95,421.13 52,457
Net profit or (loss) 53,859 -95,421.13 -52,457
Circa June of 1999, petitioner’s wife and children moved
from Dubai in the United Arab Emirates to Waterloo, Belgium.
Until sometime during 2000, petitioner’s business activities were
based in Dubai, and he retained a residence there. Between June
1999 and the latter part of 2000, petitioner traveled between
Belgium, where he and his family resided, and Dubai, where his
business activities were centered. Some of the expenses claimed
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