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night with Jolene and their daughters Amanda and Danielle.
During 1997, petitioners were trying to determine whether they
were going to remain married. At the time each petitioner
elected relief under section 6015, petitioners were divorced.
Gary testified that Jolene kept the books and records of his
endeavors. Gary provided the expense estimates to Jolene. Both
petitioners had access to their bank accounts and bank
statements. Both petitioners deposited and withdrew money from
the bank accounts. Both petitioners were responsible for the
preparation of the 1996 and 1997 Federal income tax returns and
both reviewed the returns.
Although Jolene disputed some of Gary’s statements, we found
Gary to be a credible witness. Our evaluation of his testimony
is founded upon “the ultimate task of a trier of the facts-–the
distillation of truth from falsehood which is the daily grist of
judicial life.” Diaz v. Commissioner, 58 T.C. 560, 564 (1972).
On their 1996 joint income tax return, petitioners deducted
$22,260 of expenses on Schedule A, Itemized Deductions, which
included $13,471 of job expenses, and $20,886 of expenses on
Schedule C, Profit or Loss From Business. On their 1997 joint
income tax return, they deducted $13,064 of expenses on Schedule
A and $19,115 of expenses on Schedule C. For 1996, respondent
disallowed $13,471 of the Schedule A deductions and $20,886 of
the Schedule C deductions. For 1997, respondent disallowed $379
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