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Netherlands, Thailand, and Turkey. Export placed advertisements
in Indonesia and India either in magazines or on the Internet.
Petitioner took one business trip to India, although he did not
conduct business meetings in India.
Export was unsuccessful in attracting business. Export had
one sale in 1996, which was subsequently canceled. In this
transaction, petitioner received $700, and he concedes that the
funds were returned to the buyer. Export had no sales in 1997.
Export did not have a separate bank account, nor did it file a
corporate return. Export continued its correspondence with
vendors through at least 1998.
C. Tax Returns
As indicated, Export did not file corporate income tax
returns. Petitioner, on his 1996 and 1997 Federal income tax
returns, claimed the following deductions on Schedule C:
Expense 19961 1997
Advertising $758 $850
Car and truck2 1,080 990
Insurance (other than health) 1,100 1,125
Office expense 5,150 3,998
Taxes and licenses 85 40
Travel, meals, and entertainment 1,600 1,890
Utilities 880 770
Business use of home 13,642 13,642
1 Although petitioner reported total expenses of $24,615 on
Schedule C, he reported only $13,642 on Form 1040, U.S.
Individual Income Tax Return.
2 On his 1996 return, petitioner reported 15,000 miles (of
a total of 15,450) as business use of his automobile. On his
1997 return, petitioner reported 14,050 miles (of a total of
14,700) as business use of his automobile.
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