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Thereafter, petitioner expended $4,634.59 for several items
in connection with his invention, such as a lathe with various
attachments and a computer with accessories. Petitioner
testified that the equipment was transferred to the corporation.
Petitioner filed for a patent, which was eventually obtained in
his name. The filing cost for the patent was $585. There was no
formal agreement between petitioner and CCSI for use of the
patent. During 1993 and 1994, petitioner was primarily engaged
in obtaining investors for the product. Neither CCSI nor
petitioner had any product for sale.
On Schedule C for 1993 under the name of Computer Controlled
Systems, petitioner reported no income and claimed deductions of
$16,628 for business expenses and $1,002.11 for a home office.
On Schedule C for 1994 under the name of CCSI, petitioner claimed
deductions of $12,900 for business expenses and $882.31 for home
office. In 1994, petitioner reported $1,600 in gross receipts
and $600 for cost of goods sold resulting in gross income of
$1,000.3 The Schedule C expenses consisted of:
1993 1994
Car and truck $280 $200
Sec. 179 deduction1 15,648 12,000
Insurance 150 150
3 Petitioner stated at trial that, to date, the sprinkler
system has not been ready for sale. Therefore, we assume the
gross receipts reported in 1994 were not related to the sprinkler
system.
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