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maintained solely for the purpose of substantiating their
considerable losses and not as a means for tracking costs so as
to reduce business-related expenses. The extensiveness of the
records would be more meaningful if these records illustrated
that petitioners were tracking expenses while, at the same time,
making a bona fide effort to grow their photography enterprise.
These records primarily show us that petitioners were adept at
acquiring the latest digital photography technology and supplies.
What is conspicuously missing, however, is a same level of
extensive detail showing expenses and activities specifically
geared at growing the business. For example, petitioners spent
thousands of dollars on digital cameras and supplies, yet
believed that it was unnecessary to spend more than $250 (which
included a $95 ad placed in the back of the local high school
yearbook) on the basic staples of marketing a business such as
advertisements, a listing in the yellow pages, or brochures.
Although petitioners submitted an extensive portfolio of flyers
as an exhibit, they admitted that the portfolio was not created
until shortly before time of trial. Petitioners continually cite
activities such as additional sales made in storefronts, which
purportedly occurred in 2003 and 2004. Not only did petitioners
not provide any evidence of these activities, but these years are
not in issue. The Court is concerned only with petitioners’
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Last modified: November 10, 2007