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decision is whether petitioners are entitled to costs of goods
sold and deductions for a Schedule C model train retail business
in 1994.
FINDINGS OF FACT
Most of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. Petitioners resided in
Sacramento, California, at the time the original petition was
filed in this case.
In 1994, Ronald F. Bernard (petitioner) quit his job with
the State of California, withdrew all his State retirement
money,1 and used this money, along with his savings, to open a
retail store specializing in model trains (the store).
Petitioner planned to call the store “California Model Trains”.
Petitioner located a promising site for his store in a mall
(the mall) which was under construction in Folsom, California.
The contractor building the mall told petitioner that
construction would be completed in time for petitioner to occupy
the premises in November 1994. Petitioner expected to have a
very high percentage of his annual sales occur in November and
December during the holiday season.
1 Petitioners reported this withdrawal--$41,323.09--as
income on their 1994 joint Federal income tax return.
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