John Edward Kerrigan and Joan Marie Kerrigan - Page 10

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            Finally, we have no evidence of petitioners' cost basis in the                             
            Ocean City property, and except for Mr. Kerrigan's self-serving                            
            testimony at trial, there is no evidence that Mrs. Kerrigan used                           
            the Ocean City condominium as an office.  We therefore sustain                             
            respondent's determination.                                                                

            Freight Expenses                                                                           

                  Mrs. Kerrigan claimed a Schedule C deduction for freight                             
            expenses in the amount of $122.  Respondent allowed $83.  Since                            
            petitioners have not presented any evidence to substantiate this                           
            deduction, we sustain respondent's determination.                                          

            Repair Expenses                                                                            

                  Respondent disallowed Mr. Kerrigan's $3,610.55 Schedule C                            
            deduction for repairs in its entirety.  Petitioners offered                                
            nothing to substantiate most of this amount, nor do they explain                           
            how it was computed.  Petitioners argue on brief that they have                            
            presented sufficient documentary evidence to substantiate a                                
            deduction in the amount of $329.  They offered a handwritten log                           
            prepared by Mr. Kerrigan as a record of his business, travel, and                          
            entertainment expenses for 1985.  However, they produced no                                
            invoices or canceled checks.  Under these circumstances, we hold                           
            that Mr. Kerrigan has not adequately substantiated the business                            
            purpose of this Schedule C deduction.  See sec. 1.162-1(a),                                
            Income Tax Regs.                                                                           




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