Floyd L. Garrett and Dorothy G. Garrett - Page 15

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               The second issue for decision is whether petitioners were              
          engaged in a trade or business that would allow them to deduct              
          the expenses of acquiring and refurbishing their muscle car                 
          collection after the sale in 1989.  Respondent disallowed certain           
          expenses deducted by FGI, TTI, and BEL on their respective Forms            
          1120S for tax years 1989, 1990, and 1991.  Respondent determined            
          that these expenses were personal, nondeductible payments by the            
          corporations.  Petitioners do not dispute respondent's                      
          determination that these amounts should not have been deducted by           
          the corporations.  Rather, petitioners argue that these expenses            
          are deductible by them under section 162(a) on their individual             
          tax returns as expenses incurred in the trade or business of                
          muscle cars.7                                                               
               Petitioners have identified and classified certain of these            
          expenses that relate to the refurbishment and acquisition of                
          petitioners' muscle car collection during the years 1989, 1990,             
          and 1991.  The information provided by petitioners may be                   
          summarized on a year-by-year basis and compared to the total                
          amount of deductions disallowed by respondent as follows:8                  

               7Petitioners apparently contend that the resulting increase            
          in distributable income from the corporations caused by the                 
          disallowance of these deductions was then, in turn, deductible by           
          them on their individual income tax returns as trade or business            
               8We make no finding as to the accuracy of the information              
          provided by petitioners.  We include it merely to show the                  
          approximate amount of expenses improperly deducted by the                   
          corporations during the years in issue with respect to                      
          petitioners' muscle car collection.                                         

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