DocketNumber： Docket No. 2982.
Filed Date： 10/18/1944
Status： Non-Precedential
Modified Date： 11/21/2020
Memorandum Findings of Fact and Opinion
HARRON, Judge: The Commissioner determined a deficiency in income tax for the year 1941 in the amount of $800.60. He disallowed deductions taken on the return for business expenses in the total sum of $6,079, on the ground that the claimed expenses of conducting a business were not substantiated. Petitioner, San English, reported his income on a cash receipts and disbursements basis. The only question is whether several expense items of the business were incurred and paid during the taxable year 1941.
Findings of Fact
Petitioners resided in the Bronx, New York City, during 1941. A joint income tax return for that year was filed with the collector for the second district of New York. Hereinafter reference is made to Sam English as petitioner because the issue presented relates only to a business conducted by him in 1941.
During the taxable year, petitioner operated a retail fish stand. Petitioner received gross receipts from this business in the amount of $7,660 in 1941. He deducted $6,079 as total business expenses, and reported net income from *79 the business in the amount of $1,581.
Most of the purchases of fish were made for cash, but a small amount was purchased on credit. During 1941 there were purchases of fish in the amount of $4,000. Petitioner paid $3,800 during 1941 for such purchases. On his income tax return the cost of merchandise was reported in the amount of $4,000, in the tabulation of the expenses of the business. That expense was incurred and accrued in 1941, but only $3,800 thereof was paid in 1941. Petitioner erred in deducting the entire amount of $4,000 in a return which reported income on a cash basis.
During 1941, petitioner incurred and paid the following expenses which were the ordinary and necessary expenses of conducting his business:
| Labor | $291.00 |
| Ice | 150.00 |
| Paper bags | 150.00 |
| Trucking expense | 448.00 |
| Electricity | 54.00 |
| Insurance | 100.00 |
| Rent | 480.00 |
| Cartage (Other than truck- | |
| ing expense) | 406.00 |
| Total | $2,079.00 |
The total amount of business expenses paid by petitioner in 1941 was $5,879.
Opinion
The testimony given by petitioner substantiates his claim for deductions for business expenses in the total amount of $5,879. That sum was paid during 1941. In April of 1942, petitioner *80 gave up the business he had operated in 1941. At that time he owed amounts which he could not pay. There is some doubt about the amount of his debts in 1942 when he closed his fish stand. But we are satisfied from the testimony given that he paid all of the expenses of his business for 1941 during that year in the amount of $5,879, and that only $200 of the expenses incurred was not paid in 1941. Accordingly, respondent's disallowance of the deductions for business expense is set aside to the extent of $5,879.