Floyd L. Garrett and Dorothy G. Garrett - Page 7

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          deductions or other expenses or report any other income on their            
          1989, 1990, or 1991 individual income tax returns relating to the           
          muscle car collection.  In contrast, FGI, TTI, and BEL claimed              
          considerable expenses during these years, primarily for the                 
          acquisition and renovation of petitioners' muscle car collection.           
          Respondent has determined that these expenses were improperly               
          deducted by the corporations.  Although petitioners do not                  
          dispute respondent's determination, they now contend that they              
          were in the muscle car business during the years in issue and are           
          entitled to deduct these expenses under section 162(a) on their             
          individual Federal income tax returns.                                      
               During the years in issue, it was Mr. Garrett's general                
          intention to open a muscle car museum at some future time in                
          order to exhibit his collection of muscle cars and possibly sell            
          some of the cars on display.  In 1993, Mr. Garrett incorporated             
          Floyd Garrett's Muscle Cars, Inc. (FGMCI), under the laws of the            
          State of Tennessee.  At the time of trial, Mr. Garrett had chosen           
          a location in Sevierville, Tennessee, and was in the final stages           
          of constructing a building on this site to house his collection             
          of muscle cars.  However, the muscle car museum was not open to             
          the public at any time during the years in issue and had not yet            
          opened at the time of trial.  FGMCI owns the realty and the                 
          museum building and will have the occupational licenses and                 
          insurance to run Mr. Garrett's proposed muscle car museum.  It is           

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