- 5 -
above, were electronically transferred to Wise’s business
checking account.
All of the above-referenced deductions were disallowed in
the notice of deficiency. According to an explanation included
in the notice of deficiency, the deduction for commissions and
fees was disallowed because “no deduction is allowed for any
compensation that is unreasonable or excessive”. The explanation
for the disallowance of that deduction went on to note that
petitioner had failed to “establish that the amount shown was (a)
compensation, and (b) paid”. Various reasons are given in the
notice of deficiency for the disallowances of the other
deductions listed above, including petitioner’s failure to
substantiate the payments of the underlying expenses.
Discussion
In general, a taxpayer is entitled to a deduction for all
ordinary and necessary expenses paid or incurred in carrying on
any trade or business. Sec. 162(a). Depending upon the nature
of the business, the disallowed deductions here in dispute fall
into categories of expenses generally recognized as deductible
under section 162(a).
The nature of and the manner in which petitioner conducted
his business, as either an employee of Wise or an independent
contractor of NPC, have been described only in general terms, and
many details are unknown. At trial petitioner attempted to
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: March 27, 2008