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Petitioner did not have a separate bank account for the
nursery activity. However, he kept records of income and
expenses in journals for each year. These journals reveal that
petitioner, inter alia, treated the following items as related to
the nursery activity: Car insurance, cable television fees, local
and cellular telephone charges, all utility costs, taxes and
repairs on the Oregon Street and Sixth Street properties,
automobile club dues, tools (such as router bits and scroll
saws), local newspapers, etc. In computing the car and truck
expenses petitioner kept mileage records and used the standard
mileage figures for the years in question. Virtually all of the
mileage was incurred in traveling to and from Long Beach.
Petitioner computed his meal expenses by taking the number of
days he was at Long Beach and multiplying that amount by $26.
Petitioners did not deduct meal expenses for Mrs. Gagnon because
"she's not a hard worker."
On their joint Federal income tax returns for 1991, 1992,
and 1993, petitioners deducted losses with respect to the nursery
activity in the respective amounts of $16,464, $19,857, and
$19,842. For the taxable year 1991, petitioners filed an amended
return claiming an additional loss of $5,260 based on expenses
not originally claimed. This primarily consisted of car and
truck expenses not originally claimed. On examination respondent
disallowed the loss deductions for all the years in issue.
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