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$743,561 from a business described as “international
transportation - aircraft” composed of the following:
Advertising $106
Legal and professional service 11,662
Office expense 112
Travel 80,883
Meals and entertainment (less 20
percent) 436
Other direct cost of sales 650,000
Investment research 320
Misc. 27
Bank charges 15
Net loss $743,561
Petitioners Christopher and Kim Shea also filed a joint
Federal income tax return for 1992. On a Schedule C to that
return, Christopher reported negative gross income of $150,000
from a business described as “international transportation”,
consisting solely of cost of goods sold in that amount.
In notices of deficiency, respondent determined that
petitioners had not shown that their Schedule C activity was a
trade or business and disallowed their respective losses.
Petitioners filed timely petitions contesting respondent’s
determination and alleging, in the alternative, that the Schedule
C losses were deductible under section 165, 166, or 1244.
OPINION
Petitioners contend that they are entitled to deduct the
losses claimed on their respective Schedules C because they were
engaged in the trade or business of “international
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