Clyde E. Owens and Marie W. Owens - Page 7

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          Truck Stop.  Mr. and Mrs. Owens reported as income receipts from            
          a towing service not otherwise described in the record.  Mr. and            
          Mrs. Owens deducted $1,820 for 1989 to maintain their grapevines.           
          They never had a profit from their grapevines.                              
               On their Schedule C, Mr. and Mrs. Owens deducted payments              
          totaling $8,200 for 1989 and $8,100 for 1990 to their children              
          Bryan, Dawn, and Elaine for their college education.  The Owens'            
          children did some work as needed for their parents' businesses.             
          Mr. and Mrs. Owens did not keep records of their children's work            
          in their businesses.                                                        
               Mr. and Mrs. Owens reported that they were liable for income           
          tax of $2,361 for 1989 and $3,878 for 1990.                                 
               Ms. Feltrinelli attached a Schedule C to her 1990 return.              
          She described the business as "gas, oil, and food (restaurant)",            
          and reported that the business name was "Big O".                            
          D.   Petitioners' Audit and the Notices of Deficiency                       
               Revenue Agent Ken McEver (McEver) audited petitioners'                 
          returns for the years in issue.  Respondent determined                      
          deficiencies in part because petitioners were not entitled to or            
          could not substantiate certain deductions.  Respondent also                 
          determined that the income and expenses attributable to Big O               
          Truck Stop should be reallocated under section 482 from Ms.                 

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