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also supported by reasonable inferences drawn from petitioner's
testimony. After reducing the gross receipts by the cost of
goods sold, petitioner computed his gross profit and gross income
from the prisoner meal program to be $41,412 and reported that
amount on the appropriate lines of the Schedule C. Because no
expense deductions were claimed on the Schedule C, $41,412 was
also reported as net profit. Petitioners included this $41,412
amount in the amount reported as business income on line 12 of
Form 1040 of their 1991 Federal income tax return.
OPINION
In her amendments to answer respondent has taken the
position that petitioner improperly reported the meal allowances
as income from a trade or business separate and apart from his
employment as Howard County sheriff. According to respondent, by
providing meals to the county prisoners, petitioner was
discharging a duty imposed upon him as a county employee, not as
the proprietor of a separate trade or business. Consequently,
respondent contends that the $109,952 received by petitioner as
meal allowances should be considered additional compensation paid
to petitioner as an employee of Howard County, and includable in
his income as such. Respondent further contends that any costs
incurred by petitioner in connection with the program should be
considered employee business expenses, deductible only as
miscellaneous itemized deductions on petitioners' Schedule A.
Respondent goes on to argue that if the meal allowances are
considered additional employee compensation, and the costs
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