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Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
Background
This case was submitted fully stipulated under Rule 122.
The stipulated facts are incorporated as our findings by this
reference.
During 1995, William K. Starr (petitioner) resided in
Phoenix, Arizona. Petitioner operated “Climb On A Rainbow”, a
sole proprietorship that provided hot air balloon rides to
customers.
Petitioner operated his sole proprietorship for part of 1995
in Phoenix, Arizona, and the remainder of the year in
Woodinville, Washington. During 1995, petitioner lived in a
rented apartment in Woodinville for 156 days while operating his
business.
On his Schedule C, Profit or Loss from Business, for 1995,
petitioner claimed a travel expense deduction of $18,748, of
which $18,720 represented lodging costs incurred in Washington.
Petitioner computed his lodging expenses based on a per diem rate
of $120 per day for the 156 days that he operated his business in
Woodinville.
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