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in a state of disrepair, and a few supplies, but primarily
petitioners purchased the name, goodwill, and purported contacts
of the seller. Ultimately, the petitioners discovered that the
representations by the seller were, to be charitable, overstated,
and petitioners stopped paying on the purchase price and sued the
seller. According to petitioner husband, the law suit was
unsuccessful.
JDB charged clients based upon the size of the residence to
be cleaned. Charges generally ranged from $225 to $325. The
labor costs for cleaning generally ran from $50 to $65 per person
per day. Normally, most homes could be cleaned by two persons in
a day and a half, although larger homes required more persons or
more time.
Petitioners maintained most records for JDB on a computer.
In December 1993, petitioners suffered a loss of their home from
fire. Most paper records were destroyed, and water damage to the
computer prevented any retrieval of its records.
Petitioners did not file a timely 1990 Federal income tax
return, because in the opinion of petitioner husband, there was
no tax liability. However, in response to an inquiry from
respondent’s agents, petitioners, on April 19, 1994, filed a
joint Federal income tax return, Form 1040. Included in that
return was a Schedule C for JDB reflecting income of $27,165 and
the following expenses:
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Last modified: May 25, 2011