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Respondent sent a “Branerton” letter to petitioners on
December 3, 1999. In response, petitioners sent respondent items
such as telephone bills, an invoice for a 1995 advertisement,
miscellaneous invoices for cost of goods sold, and letters from
credit card companies stating how much petitioners owed in
principal and interest.
Less than 72 hours before the calendar call for this case to
go to trial, petitioners provided respondent with additional
substantiating documentation. This documentation established
that petitioners did have an advertising campaign. There were
also records of 180 clients’ names, the orders the clients
placed, follow-up letters, and thank-you letters. During the
week of the trial calendar, petitioners provided records that
established that they incurred substantial debts in the early
years of their activity to finance inventory and advertising
costs. These debts were in the form of credit card purchases and
cash advances. Other newly provided information demonstrated
that the interest and commission expenses were related to
business purposes. The Schedule C deductions disallowed by
respondent consisted mainly of the interest and commission
expenses. After receiving and reviewing the newly furnished
information, respondent settled the case in a period of 6 days.
Respondent conceded the issues to the extent that they were
properly substantiated. Respondent and petitioners agreed that
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