Tax Court Asked to Redetermine Deficiencies, Penalties

a. Respondent erred when he disallowed Petitioners' meals and entertainment expenses in the amounts of $268 and $5,718 in taxable years 2017 and 2018, respectively.

b. Respondent erred when he disallowed Petitioners' travel expenses in the amounts of $190 and $9,226 in taxable years 2017 and 2018, respectively.

c. Respondent erred when he disallowed Petitioners' rental expenses for Other Business Property in the amounts of $1,300 and $27,788 in taxable years 2017 and 2018, respectively.

d. Respondent erred when he disallowed Petitioners' rental expenses for Vehicles, Machinery, and Equipment in the amount of $6,878 in taxable year 2017.

e. Respondent erred when he disallowed Petitioners' office expenses in the amounts of $12,926 and $1,04 in taxable years 2017 and 2018, respectively.

f. Respondent erred when he disallowed Petitioners' legal and professional service expenses in the amounts of $2,288 and $6,553 in taxable years 2017 and 2018, respectively.

g. Respondent erred when he disallowed Petitioners' car and truck expenses in the amounts of $7,058 and $9,714 in taxable years 2017 and 2018, respectively.

h. Respondent erred when he disallowed Petitioners' advertising expenses in the amounts of $1,332 and $16,671 in taxable years 2017 and 2018, respectively Respondent erred when he disallowed Petitioners' other expenses in the amount of $2,278 in taxable year 2018.

i. Respondent erred when he disallowed Petitioners' utilities expenses in the amount of $7,869 in taxable year 2018.

j. Respondent erred when he disallowed Petitioners' takes and licenses expenses in the amount of $25 in taxable year 2018.

k. Respondent erred when he disallowed Petitioners' taxes and licenses expenses in the amount of $5,725 in taxable year 2018.

l. Respondent erred when he disallowed Petitioners' repairs and maintenance insurance expenses in the amount of $5,725 in taxable year 2018.

m. Respondent erred when he disallowed Petitioners' insurance expenses in the amount of $2,508 in taxable year 2018.

n. Respondent erred when he disallowed Petitioners' depreciation and I.R.C. § 179 expense in the amount of $3,525 in taxable year 2018.

o. Respondent erred when he disallowed Petitioners' cost of goods sold in the amount of $194,396 in taxable year 2018.

p. Respondent erred when he determined that the penalty under I.R.C. § 6662 applied in each of the Years at Issue.

a. During the Years at Issue, Petitioner Mark A. Bearak was self-employed as an architect and an adjunct professor architecture at Columbia University.

b. During the Years at Issue, Mr. Bearak reported items of income, credit, expense, and deduction on a Schedule C attached to the Returns.

c. Mr. Bearak incurred and paid meals and entertainment expenses related to his business during the Years at Issue and therefore is entitled to the deductions claimed for these items on the Returns in the amounts reported.

d. Mr. Bearak incurred and paid travel expenses related to his business during the Years at Issue and therefore is entitled to the deductions claimed for these items on the Returns in the amounts reported.

e. Mr. Bearak incurred and paid rental expenses for other business property related to his business during the Years at Issue and therefore is entitled to the deductions claimed for these items on the Returns in the amounts reported.

f. Mr. Bearak incurred and paid rental expenses for vehicles, machinery, and equipment related to his business during taxable year 2017 and therefore is entitled to the deductions claimed for these items in the amounts reported.

g. Mr. Bearak incurred and paid office expenses relate to his business during the Years at Issue and therefore is entitled to the deductions claimed for these items on the Returns in the amounts reported.

h. Mr. Bearak incurred and paid legal and professional service expenses related to his business during the Years at Issue and therefore is entitled to the deductions claimed for these items on the Returns in the amounts reported.

i. Mr. Bearak incurred and paid car and truck expenses related to his business during the Years at Issue and therefore is entitled to the deductions claimed for these items on the Returns in the amounts reported.

j. Mr. Bearak incurred and paid advertising expenses related to his business during the Years at Issue and therefore is entitled to the deductions claimed for these items on the Returns in the amounts reported.

k. Mr. Bearak incurred and paid other expenses related to his business during taxable year 2018 and therefore is entitled to the deductions claimed for these items in the amounts reported.

l. Mr. Bearak incurred and paid utilities expenses related to his business during taxable year 2018 and therefore is entitled to the deductions claimed for these items in the amounts reported.

m. Mr. Bearak incurred and paid taxes and license expenses related to his business during taxable year 2018 and therefore is entitled to the deductions claimed for these items in the amounts reported.

n. Mr. Bearak incurred and paid repairs and maintenance expenses related to his business during taxable year 2018 and therefore is entitled to the deductions claimed for these items in the amounts reported.

o. Mr. Bearak incurred and paid insurance expenses related to his business during taxable year 2018 and therefore is entitled to the deductions claimed for these items in the amounts reported.

p. Mr. Bearak was entitled to a depreciation deduction for property related to his business during 2018 and therefore is entitled to the deductions claimed for these items in the amounts reported.

q. Mr. Bearak properly reported his businesses' costs of goods sold as being $194,396 in taxable year 2018.

r. To the extent there is any understatement of tax on either of the Returns, Petitioners acted in good faith and have reasonable cause for such understatement.