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Petitioners argue that the deduction for car and truck
mileage should be based on 183 trips in 1992 and 188 trips in
1993, because of the number of invoices. They point to the
testimony of Mr. Ginsburg, the custodian of records at Abbey
Road, who stated that the invoices contained language that the
merchandise was purchased and picked up in Los Angeles. However,
petitioners did not provide any evidence (such as a diary or log)
to corroborate the number of trips that occurred.
Petitioners did not maintain any records (such as an account
book, diary, log, or trip sheets) to substantiate the claimed
mileage expense deductions. Petitioners failed to substantiate
the mileage expenses by adequate records. Sec. 1.274-
5T(c)(2)(i), Temporary Income Tax Regs., 50 Fed. Reg. 46017 (Nov.
6, 1985). They also failed to substantiate the mileage expenses
by other sufficient evidence. Sec. 1.274-5T(c)(3)(i), Temporary
Income Tax Regs., 50 Fed. Reg. 46020 (Nov. 6, 1985).
Consequently, petitioners are not entitled to the claimed car and
truck expenses in excess of the $1,680 in 1992 and the $1,680 in
1993 conceded by respondent.
Issue 3. Cost of Goods Sold (Supplies)
Cost of goods sold is subtracted from gross receipts from
sales to determine gross income from sales. Sec. 1.61-3(a),
Income Tax Regs. The cost of goods purchased for resale is
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