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totaling $24,300. We are not persuaded that Toraya paid Joan or
Junichi more than that amount in 1988 for purchases for the
Berkeley restaurant. For 1989, petitioners submitted checks
totaling $11,100. Of those checks, we exclude from the amount
deductible the check dated June 28, 1989, in the amount of
$2,000, payable to cash and endorsed by Junichi. Nakamura
testified that Joan left the California area in April 1989, and
that Junichi was preparing to close down the Berkeley restaurant.
The restaurant closed on June 30, 1989. We are not persuaded
that Toraya give Junichi the $2,000 to purchase food for the
restaurant. In addition, we exclude the check dated April 25,
1989, payable to Joan, in the amount of $1,100, and containing a
notation indicating its purpose was "Payroll". We are not
persuaded that the check was for food purchases or that that
payment was not deducted as compensation. Accordingly, we hold
that for 1988 and 1989 the allowable deductions for purchases by
Joan and Junichi are $24,300 and $8,000, respectively.
Berkeley Restaurant Inventory
Petitioners contend that Toraya is entitled to write off for
1989, $19,917 as purchases for the Berkeley restaurant's
inventory. Petitioners maintain that at the beginning of 1989
the Berkeley restaurant had an inventory balance of $19,917, and
on June 30, 1989, when the restaurant was closed, it had an
inventory balance of zero. Petitioners maintain that whatever
inventory remained on hand when the restaurant closed its doors
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