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devoid of any other facts about the operation of the van pool, such
as the number of passengers and the amounts, if any, charged to
each.
In the notice of deficiency, respondent disallowed the
expenses of the van pool operation to the extent they exceeded
reported income on the grounds that the amount and deductibility of
such expenses had not been substantiated. In addition, respondent
disallowed the van pool losses on the grounds that Mr. Bullock did
not enter into the van pool arrangement with an “actual and honest
objective of making a profit.” Beck v. Commissioner, 85 T.C. 557,
569 (1985); see sec. 1.183-2(a), Income Tax Regs.
Petitioners bear the burden of substantiating the amount and
deductibility of expenses claimed on their returns. See Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). There is no
evidence in the stipulation of facts or in the trial record to show
the amount or business purpose of any of the van pool expenses
claimed on the Bullocks’ returns. Consequently, we sustain
respondent's disallowance of the claimed Schedule C deductions by
the Bullocks for the van pool activity.
Issue 3: Additions to Tax and Penalties
The remaining issues relate to additions to tax and penalties;
i.e., whether (a) the Fieldses and the Bullocks are liable for
additions to tax for failure to timely file a return under section
6651(a)(1), and (b) whether all petitioners are liable for the
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