Charles R. Bowden and Sue I. Bowden - Page 29

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            shareholders.”  Markwardt v. Commissioner, 64 T.C. 989, 995                                
            (1975).                                                                                    
                  Petitioners on their 1986 Schedule C claimed deductions for:                         
            Insurance--$100, mortgage interest--$69,860, taxes--$340, and                              
            contract labor--$69,850.  Petitioners, on their 1989 Schedule C                            
            claimed deductions for:  Insurance--$7,945, mortgage interest--                            
            $65,639, taxes--$8,050, and repairs--$14,490.                                              
                  Petitioners have not demonstrated that the expenses were                             
            incurred for the vending machines that petitioners have claimed                            
            they owned.  The record does not reflect that the expenses were                            
            paid or incurred during the tax years 1986 and 1989.  In                                   
            addition, petitioners have not shown that any such items were                              
            ordinary and necessary business expenses.  Sec. 1.162-1(a),                                
            Income Tax Regs.                                                                           
                  Petitioners contend that, in 1986, they owned 70 vending                             
            machines out of the total of 490 and that they prorated all                                
            corporate operating expenses between the vending machines alleged                          
            to be theirs and the total.  However, petitioners presented no                             
            evidence demonstrating the proration or allocation between the                             
            vending machines claimed by petitioners and the corporate vending                          
            machines.                                                                                  
                  It should also be noted that PWIC, PWMC, and C.B. Crest, in                          
            addition to commercial water purification, leased systems for                              
            home use.  Petitioners conceded on brief that they failed to                               





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