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under the provisions of section 6651(a)(1) in the amount of
$1,658. After a concession by petitioners regarding unreported
dividend income, the issues for decision are: (1) Whether
petitioners are able to substantiate claimed Schedule C expenses;
and (2) whether petitioners are liable for the addition to tax
for delinquency.
Background
Some of the facts have been stipulated, and they are so
found. The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time they filed
their petition, petitioners resided in San Clemente, California.
In approximately September 1989, petitioners purchased a
business known as Joan’s Dust Busters (JDB) allegedly for
$125,000. The business of JDB was to clean a newly built home
for occupancy. JDB had contacts with several residential home
developers. Just prior to the move-in by the new owner, the
developer would contact petitioners, who would send one or more
workers (depending on the size of the home) to vacuum the new
carpets, remove “sticky stuff” from and clean newly installed
windows, and conduct other general cleaning operations. In
addition, petitioners had agreements with developers regarding
model homes, in that petitioners would have the developers’ model
homes cleaned on a regular, generally monthly, basis.
Petitioners’ purchase of JDB included some equipment, which was
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