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one as an employee and/or independent contractor for the above-
mentioned corporation, one as an independent software developer,
and one as a “database consultant”. Despite this, petitioners
have basically come to this Court with a pile of receipts and
stipulated amounts, arguing that the various expenses should be
deductible. They made little effort to prepare this case with
respondent prior to the calendar call. There are no
contemporaneous records, such as accounting ledgers, which
differentiate the expenses among the various business activities,
and the corporate checking account was used for purposes of the
other business activities as well as for the corporation.
Nonetheless, despite the disarray of the record, because we are
convinced that Mr. Brayshaw was engaged in the business
activities and that he incurred expenses in connection therewith,
we address each of the broad categories of expenses in turn.
“Returns and allowances” and advertising expenses
In conducting the business of FDLS, Mr. Brayshaw was
assisted by another individual, Seth G. Rowland. The
corporation’s bank account was used to pay Mr. Rowland $518 on
October 24, 1996, and $4,410.02 on February 6, 1997. Petitioners
argue that these amounts are deductible. On petitioners’ return,
the amounts were listed as “returns and allowances” because
petitioners did not know how else to classify them. After Mr.
Brayshaw’s testimony, it remains unclear exactly what portion of
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