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The increase in the amount of income for 1989 ($39,062) between
that reported on the amended return and that reported on the
original return is the gain (short-term) from the sale of Woodhead
stock which had originally been reported on Schedule D of
petitioners' 1989 tax return. At trial and in their posttrial
brief, petitioners state they are willing to concede 30 percent of
the expenses claimed on their amended returns, so that now they
claim expenses of $15,241 for 1989 and $9,308 for 1990. The
majority of these expenses represents home office expenses
(including the purchase of furniture) and automobile expenses.
Respondent disallowed this deduction on the ground that the
expenditures were not ordinary and necessary expenditures.
Further, as to those deductions claimed in connection with the use
of petitioners' residence as a home office, the deductions were
disallowed, in part, on the basis that some of the claimed expenses
were personal, and on the basis that petitioners failed to prove
their home office was used exclusively for business purposes.
Miscellaneous Itemized Deductions
On Schedule A of their 1990 return, petitioners claimed $7,174
in miscellaneous itemized expenses. Apparently the majority of the
expenses with regard to this deduction consist of travel and meal
expenses in connection with Mr. Martin seeking new employment. On
petitioners' amended 1990 tax return, the amount of the deduction
was increased to $7,176; no explanation was given for the $2
difference. Respondent disallowed the deduction for lack of
substantiation.
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