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Respondent determined a deficiency of $2,561 in petitioner’s
1995 Federal income tax, a section 6651(a)(1) addition to tax of
$639.25, and a section 6662(a) penalty of $512.20. This Court
must decide: (1) Whether the notice of deficiency was mailed
within the statute of limitations period; and if it was, (2)
whether petitioner is entitled to deduct expenses on Schedule C,
Profit or Loss From Business, of $36,167; (3) whether petitioner
is liable for the section 6651(a)(1) addition to tax; and (4)
whether petitioner is liable for the section 6662(a) penalty.
Some of the facts in this case have been stipulated and are
so found. Petitioner resided in Pacoima, California, at the time
she filed her petition.
Respondent disallowed $36,167 of petitioner's 1995 Schedule
C expense deductions because they were not substantiated. Of
this amount, $26,666 is for depreciation of motion picture
synchronization rights from recordings. The remaining amount
represents deductions for advertising, car and truck expenses,
insurance, office expense, repairs and maintenance, supplies,
utilities, record storage, and auto club. As reported on her
Schedule C, petitioner had no gross income from her "Film Video &
Record Production" business.
We first observe that petitioner did not appear at trial.
Instead her attorney, who was her husband at least during 1995,
appeared on her behalf. Petitioner's sole argument before this
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