-14- Operating expenses: Direct expenses: Utilities $951 Indirect expenses: Insurance 844 Repairs and maintenance 1,802 Utilities 2,846 Total 5,492 Business-use percentage .252 1,382 Carryover from 1997 2,367 Total 14,702 Depreciation: Current depreciation 2,388 Depreciation carryover from 1997 2,388 Total 4,776 Total 9,478 1 We note petitioners’ $2 adding mistake. The 1998 Schedule C itemized the total expenses of $4,137 as follows: Supplies $835 Meals and entertainment (after 50-percent reduction) 3,302 Total 4,137 3. 1999 For 1999 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 1999 personal return included a 1999 Schedule C that reported the income and expenses of Michelsen as “Corporate Director/Consultant”.9 The schedule reported on the basis of an accrual method of accounting that the 9 Although the 1999 Schedule C lists the “Name of proprietor” as “James and Cathy LeBloch”, the return clarifies on Schedule SE, Self-Employment Tax, that the income reported on the Schedule C is that of Michelsen only.Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: November 10, 2007