Darl N. and Bonnie S. Miller - Page 2




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         respondent on January 5, 1998, respondent requested a hearing in             
         this matter.  We conclude that a hearing is not necessary.  We               
         decide petitioners' motion based on the record.  The record                  
         consists of petitioners' motion for costs with attached affidavits,          
         respondent's notice of objection to petitioners' motion for costs,           
         and the uncontroverted statements by the parties as contained in             
         the aforementioned documents.                                                
              On their 1993 joint Federal income tax return,                          
         petitioners claimed, inter alia, itemized deductions of                      
         $36,594, an advertising deduction on Schedule C2 of $43,362                  
         and other Schedule C expenses in the amount of $100,362.  The                
         $100,362 claimed expenses consist of:                                        
              1.  Credit Reports #6064             $28,610                            
              2.  Business Development #6073        20,932                            
              3.  Loan Costs #6067                  24,706                            
              4.  Contract Labor #6068              13,228                            
              5.  Costs of Funds #6079              12,886                            
                                  100,362                                             
              Upon audit of petitioners' 1993 return, respondent                      
         determined the following adjustments as stated in the                        
         statutory notice of deficiency:                                              
              Because petitioners' adjusted gross income for 1993                     
         exceeded $100,000 respondent reduced petitioners' itemized                   
         deductions in the amount of $624.                                            
              The amount claimed by petitioners as advertising expense                
         on Schedule C2 of their return in the amount of $43,362 was                  
         reduced in the amount of $2,925 because it was determined that               
         the $2,925 was either a personal expense and/or was not an                   
         ordinary and necessary business expense.                                     

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