Steven J. and Michele D. Scagliotta - Page 2

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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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