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Respondent determined a deficiency of $6,741 in petitioners'
1990 Federal income tax and an accuracy-related penalty of
$1,348.20 under section 6662(a).
The issues for decision are: (1) Whether petitioners are
entitled to deductions under section 162(a) for expenses incurred
from a real estate development and marketing activity of Steven
J. Scagliotta (petitioner); (2) whether petitioners are entitled
to a business bad debt deduction under section 166(a) for the
year at issue; and (3) whether petitioners are liable for the
accuracy-related penalty under section 6662(a) for negligence or
disregard of rules or regulations.
Some of the facts were stipulated, and those facts, with the
annexed exhibits, are so found and are incorporated herein by
reference. At the time the petition was filed, petitioners'
legal residence was Bridgewater, New Jersey.
In 1982, petitioner developed a strategy for trading on the
commodity futures market. He documented his strategy, which
relies on various charting methods, in a manual that he intended
to market to the public. Petitioner began an operation using the
trade name Commodity Investment Strategists (CIS) to effectuate
this activity. Petitioner sold some of his manuals in the early
1980's but overall did not have much success in marketing his
trading strategy. He, thereafter, discontinued this activity and
sold the manual in only isolated and incidental situations. No
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