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Petitioners reported income of $2,424 in 1999 and $2,679 in 2000
from the Schedule C activity.2 The car expenses were computed by
using the standard mileage expense method. See Rev. Proc. 98-63,
1998-2 C.B. 818 ($.31 per mile); Rev Proc. 99-38, 1999-2 C.B. 525
($.325 per mile). The depreciation deduction claimed for the
1999 taxable year was for automobiles for which deductions using
the standard rate were claimed, and petitioners concede that they
are not entitled to that deduction. On the 2000 tax return,
petitioners deducted the mortgage interest expense also as an
itemized deduction, and they concede that the deduction was
properly disallowed on the Schedule C.
The activity reported on the Schedules C related to
petitioner Terri L. Pyrdum (hereinafter petitioner). Petitioners
divorced in 2001, and petitioner is now married to Allan Brittain
(Mr. Brittain). During 1999 and 2000, petitioner was employed
full time as an inside sales representative by Holt Specialty
Equipment (Holt), a machinery manufacturer. As a sales
representative, she traveled to various machinery trade shows in
the region. Holt reimbursed petitioner for all of her travel
expenses incurred on behalf of Holt.
During the years in issue, petitioner was also associated
with Key Credit Corp. (Key Credit), a financing company. Key
2 In the notice of deficiency respondent increased petitioners’
income by these amounts. Respondent concedes that these items of
income were included in the returns.
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