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startup costs, purchased supplies, and performed repair work and
remodeling for the day care center. Petitioner considered
himself to be a “handyman” for Wee Ones Child Care. Petitioner
gave Ms. Moore receipts for his cash expenditures. Ms. Moore
presumably utilized the receipts in calculating income and
expenses for Wee Ones Child Care.
Ms. Moore prepared joint tax returns for petitioner and
herself during their marriage. For taxable year 1998, as in
prior taxable years, petitioner gave Ms. Moore his Form W-2, Wage
and Tax Statement, and other tax information, and Ms. Moore
prepared the return and presented the completed return to
petitioner for his signature. For the year in issue, petitioner
also provided Ms. Moore a list of employee business expenses
approximating $600. After Ms. Moore prepared the 1998 return,
petitioner did not review it prior to signing it.
The 1998 return reported petitioner’s wages of $27,200. The
return also reflected itemized deductions of $14,526, which
amount included deductions of $5,212 for medical and dental
expenses and deductions of $3,889 for unreimbursed employee
business expenses. The return also attached a Schedule C, Profit
or Loss From Business, relating to Wee Ones Child Care. The
Schedule C reflected gross receipts of $20,100, expenses of
$30,549, and a net loss of $10,449.
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Last modified: May 25, 2011