- 20 -
receipts, much less profits, from the enterprise during the years
at issue; Mr. Doxtator conceded that the reported gross receipts
were actually payments for travel expenses.
Considering all of the foregoing factors, we conclude that
petitioners have failed to show error in respondent's
determination that the Native American Finance activity was not a
trade or business within the meaning of section 162(a).
Accordingly, we sustain respondent's determination to disallow
the cost of goods sold in 1997. We also sustain respondent's
determination to disallow the claimed expense deductions in 1997
and 2000 and to reclassify the gross receipts reported on the
respective Schedules C as income from activities not engaged in
for profit.13
Capital Gains
Respondent determined that petitioners received $15,720 in
1999 from the sale of stocks in which they had a basis of
$14,720, resulting in short-term capital gain of $1,000 in 1999.
Respondent further determined that petitioners had long-term
capital gain of $146 in that year.
Petitioners concede that stocks held in Mrs. Doxtator's name
that were sold in 1999 generated the $15,720 in proceeds noted
above. They also have not challenged, in their testimony or on
13 This is the effective result of moving the gross receipts
from Schedule C to line 21, "Other Income", on the Form 1040 as
respondent did in the notice of deficiency.
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