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retained to perform legal services on “litigation and technical
matters” preliminary to filing a law suit. “The Law Offices of
Lori D. Ecker” submitted an invoice dated September 21, 1994, for
$175 to “Mrs. Reynolds” for “initial consultation”. On December
27, 1994, petitioner wrote a check for $2,500 to “Trent &
Butcher” that was paid by his bank on January 10, 1995. On
Schedule C, petitioners deducted legal expenses related to Mrs.
Reynolds’ sex discrimination claim.
Respondent determined that, to the extent substantiated,
petitioners’ legal expenses are deductible as itemized deductions
on Schedule A rather than business expenses on Schedule C.
C. Various Schedule C Expenses
Respondent disallowed petitioners’ claimed Schedule C
expenses for 1993 and 1994. At trial, petitioners provided
copies of miscellaneous checks, receipts, and invoices from 1993
as substantiation for Schedule C expenses for office expense,
repairs and maintenance, and supplies. Respondent concedes that
petitioners expended $140 for professional licenses for 1993.
Petitioners offered no evidence to substantiate expenditures for
business interest, commissions and fees, telephone expenses, and
expenses for professional journals for either year.
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