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increased by $22,000 to reflect the advances from suppliers
claimed by petitioners.
Petitioners now contend that credit card charges, in
addition to those allowed by respondent, are deductible as
business expenses. Respondent treated all payments on personal
credit cards as personal living expenses. Petitioners argue that
it was unreasonable for respondent to treat the payments in that
manner. Petitioners claim that they are entitled to additional
business expense deductions of $17,774.94 on JKY's 1990 return
and $26,788.87 on JKY's 1991 return for expenses charged to
personal credit cards. Petitioners have offered schedules of
credit card charges prepared by Caufield that categorize each
credit card expenditure. The underlying credit card statements
are not part of the record in this case. Also, the schedules
show that certain statements were not available at the time the
schedule was created. Caufield testified at trial that he
prepared the schedules and consulted Yoon only when Caufield was
unclear as to the classification of a charge as business or
personal.
Numerous items claimed as business deductions by petitioners
appear to be for travel and entertainment, i.e., restaurant
charges and airline charges. Petitioners claim that 100 percent
of these expenses is deductible, ignoring the 80-percent limit on
deductibility under section 274(n). Furthermore, to prove
entitlement to deductions for travel and entertainment expenses,
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