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2. Whether Petitioners Had More Deductions or Cost of
Goods Sold Than Allowed by Respondent
Respondent's agent audited petitioners in these cases and
allowed deductions and cost of goods sold to the extent
substantiated by petitioners. Petitioners contend that they may
deduct more than respondent allowed.
a. Deductions for The Owens' Vineyard
Mr. and Mrs. Owens contend that they may deduct $1,820 for
vineyard upkeep in 1989. We disagree.
Mr. and Mrs. Owens had no records for this activity and no
experience in the business. There is no evidence how they
conducted this activity. Mr. and Mrs. Owens denied that they
made wine. There is no evidence that the vineyards produced any
income. Mr. and Mrs. Owens did not show that their vineyard was
an activity for profit.
b. Franchise Payment
Petitioners contend that Mr. Owens orally gave Ms.
Feltrinelli a franchise to operate Big O Truck Stop. Petitioners
contend that Ms. Feltrinelli made a $5,000 franchise payment to
Mr. Owens in the years in issue. Other than Mr. Owens'
testimony, there is no evidence that Ms. Feltrinelli paid $5,000
to the Owens in 1989 or 1990. The signs, telephone-answering
procedure, and bank accounts suggest that Mr. Owens owned and
operated Big O Truck Stop. Petitioners have failed to prove Ms.
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