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reconstruction. As a result, we find that petitioners did not
offer into evidence a reasonable reconstruction of their
expenditures.
We conclude that petitioners did not introduce credible
evidence or comply with the substantiation and record-keeping
requirements of the Code, and the burden of proof does not shift
to respondent under section 7491(a).
II. Claimed Expenses
In the notice of deficiency, respondent disallowed
deductions for the reported expenses because petitioners did not
establish that the reported expenses were ordinary and necessary
trade or business expenses or expended for the purpose designated
and they did not meet the requirements for allowable job-hunting
expenses. Petitioners dispute these determinations and further
argue that expenses incurred by Mr. Evan as a professor are
deductible and the expenses have been substantiated by adequate
records. We address each of these arguments below.
A. Schedule C Expenses
On the Schedules C for 1997 and 1998, petitioners claimed
business expenses for advertising, car and truck expenses,
depreciation, taxes and licenses, office expenses, supplies, and
travel but reported no income on the Schedules C from any
business activities, specifically Mr. Evan’s profession as a real
estate broker.
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