Even when you have good books and records. In Georgia C. Farber (T. C. Memo. 2010-37) the taxpayer reported on her Schedule C $2,351 of gross receipts from her candle-selling activity and $33,475 in deductions for advertising, insurance, taxes, licenses, etc. The Court noted the taxpayer did not maintain a general ledger, financial statements, records of insurance, records of appraisal, records of advertising, or a separate bank account relating to her retail activity. Further, petitioner did not create income and expense worksheets, business or marketing plans, operating budgets, cost-benefit analyses, or financial projections relating to the activity, nor did she obtain a business license or fictitious business name relating to her retail activity. Expenses relating to petitioner's retail activity were billed to her and paid out of her personal account. The Court found she did not have the requisite intent to make a profit, and disallowed all deductions in excess of her gross income from the activity.
The moral of the story.....keep those books and records in shape, make budgets and financial projections to show you are in business to MAKE A PROFIT!!! If you need any accounting or tax assistance, please call my office 850-470-8403.
October in Pensacola
5 years ago
