-7-
taxes. On petitioners' amended 1989 tax return, the amount claimed
for tax-work expenses was reduced to $1,800. At trial and in their
posttrial brief, petitioners state they are willing to concede 60
percent of the $1,800, so now they claim $720 for tax-work
expenses. Respondent disallowed this deduction on the basis of
failure to substantiate.
Schedule C Expenses
After Mr. Martin was relieved of his duties as president of
Aero-Motive, he started a consulting business known as M.L.
Associates.
During 1989 and 1990, and for 6 or 7 years prior thereto, Mrs.
Martin operated a business, known as MAM Leasing-R.E., that leased
2 personal computers which had been acquired in 1983. Starting in
1989, petitioners decided to change the business direction of MAM
Leasing-R.E. to that of real estate development. The Schedules C
filed with petitioners' original returns for 1989 and 1990
aggregated the income and expenses of M.L. Associates and MAM
Leasing-R.E. On petitioners' amended tax returns for 1989 and
1990, the income and expenses of M.L. Associates and MAM Leasing-
R.E. were separately reported on separate Schedules C. The income
and expenses reported on Schedules C of petitioners' original and
amended returns are as follows:
GROSS INCOME EXPENSES
1989 1990 1989 1990
Original Return $ 1,778 -0- $11,540 $12,489
Amended Return 40,840 -0- 21,774 13,297
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