-13-
Supplies 17,560
Travel 12,365
Meals and entertainment
(after 50-percent reduction) 1,588
Utilities 10,921
Wages 87,201
Other expenses1 18,719
Total 239,745
1 The 1997 Schedule C did not identify any of
these “other expenses”.
2. 1998
For 1998 Federal income tax purposes, petitioners did not
report the income and expenses of the Nature’s Touch shops on
their personal income tax return. Their 1998 personal return
included a 1998 Schedule C that reported the income and expenses
of Michelsen as “Board Chairman of NT”. The schedule reported on
the basis of the cash receipts and disbursements method of
accounting that the reported business had a net profit of $23,193
for 1998, resulting from gross receipts of $36,808, total
expenses of $4,137, and home business expenses of $9,478. The
schedule was accompanied by a 1998 Form 8829 reporting that 25.2
percent of the residence (630/2500) was used exclusively for
business purposes and that the $9,478 of home business expenses
consisted of operating expenses of $4,702 (inclusive of the
$2,367 carryover from 1997) and depreciation of $4,776 (inclusive
of the $2,388 carryover from 1997). The Form 8829 itemized the
home business expenses as follows:
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Last modified: November 10, 2007