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Respondent determined a deficiency of $5,636 in petitioners'
1995 Federal income tax and a section 6662(a) penalty of
$1,127.20. At trial, petitioners conceded that they are not
entitled to deductions of $3,000 for contract labor and $1,156
for utilities expenses, which they claimed on their Schedule C.
Respondent conceded the section 6662(a) penalty. This Court must
decide: (1) Whether petitioners are entitled to a claimed
Schedule C deduction of $3,276 for vehicle expense; and (2)
whether petitioners are entitled to an $11,561 deduction for
expenses claimed on their Schedule F. The earned income credit
under section 32 will automatically be adjusted for any changes.
Some of the facts in this case have been stipulated and are
so found. Petitioners resided in St. Paul, Minnesota, at the
time they filed their petition.
Larry Land (petitioner) filed a Schedule C for a business
named New Tech Ideas (New Tech) which was in the business of "NEW
PRODUCTS". Petitioner is the proprietor of New Tech.
Apparently, petitioner has various products he has invented, such
as a "wrist saver" and a "dice randomizer". He claimed he had 17
games copyrighted. Petitioner claimed he had "a lot of
copyrights and a lot of patents out there". At trial he stated,
"Hopefully, one day I'll be able to market them." As part of his
"business", petitioner claimed that he drove around to various
stores to window shop, where he would look at the merchandise in
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