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The issue for decision is whether petitioners are entitled
to deduct certain business expenses in excess of those allowed by
respondent. Some of the facts have been stipulated and are so
found. The stipulations of fact and the attached exhibits are
incorporated herein by this reference. Petitioners resided in
Fort Worth, Texas, on the date the petition was filed in this
case.
Petitioners received wage and business income from several
sources during 1995. Petitioner wife (Ms. Nitschke) worked as a
legal secretary for the law office of Haynes and Boone L.L.P.,
earning wages in the amount of $18,969. She also earned wages
from Shannon Gracey Ratliff and Miller DTD in the amount of $270.
Petitioner husband (Mr. Nitschke) worked for Duro-Test
Corporation, earning taxable wages in the amount of $32,933.84.
In addition, petitioners conducted three business activities for
which they filed Schedules C with their 1995 joint Federal income
tax return. The first was petitioners’ Melaleuca sales and
marketing business with a claimed loss of $13,342. The second
was Mr. Nitschke’s business as a musician with a claimed loss of
$3,994. The third was Ms. Nitschke’s business as a freelance
legal secretary with a reported profit of $4,741.
In the statutory notice of deficiency mailed January 21,
1999, respondent made the following adjustments to the respective
deductions claimed by petitioners:
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