- 7 -
Legal and 265 285
professional
Office2 0 0
Rent or lease 0 0
Repairs and 0 0
maintenance
Supplies 1,039 1,383
Taxes and 0 0
licenses
Travel 0 0
Utilities 0 25
Other 154 103
Expenses for business 6,348 5,739
use of home
Total expenses $21,421 $16,050
In the notice of deficiency, respondent disallowed
petitioners’ claimed Schedule C deductions for expenses on the
ground that petitioners were not engaged in a trade or business
activity for profit. However, respondent allowed as additional
itemized deductions real estate taxes and mortgage interest
included in the computation of expenses of business use of home.
In addition, respondent allowed Schedule C expenses to the extent
of income reported from the activity.
Discussion
The parties disagree as to whether petitioners engaged in
their Schedule C activity with an objective of making a profit
within the meaning of section 183. Section 183(a) disallows
2 On their Schedules A, Itemized Deductions, petitioners
claimed that 44 percent of their home was used as office space.
They did not, however, upon request, allow respondent’s agent
into their home to survey this space, claiming that such a visit
would be “unnecessary and unwise.”
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Last modified: November 10, 2007