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Respondent determined that certain deductions were not
ordinary and necessary expenses incurred while carrying on a
trade or business. We must decide whether petitioners are
entitled to deduct on Schedule C, Profit or Loss from Business,
cost of goods sold and various business expenses for 1996; we
hold that they are not. We must also decide whether respondent’s
notice of deficiency is valid; we hold that it is.
Some of the facts have been stipulated and are so found.
The exhibits received into evidence are incorporated herein by
reference. At the time the petition in this case was filed,
petitioners resided in Alexandria, Virginia. Petitioners are
husband and wife. References to petitioner in the singular are
to Christopher Joseph Bush unless otherwise noted.
FINDINGS OF FACT
In 1996, petitioner established Aspiring Artists, a sole
proprietorship whose stated purpose was to manage and develop
artistic talent. In this pursuit, petitioner represented a band
and entered into an agreement with his stepdaughter Jennifer
Hummer (sometimes Jennifer or petitioners’ daughter or
petitioner’s stepdaughter).
Petitioners filed a joint return in 1996. Petitioners
attached to their 1996 Federal income tax return a Schedule C on
which they reported $3,550 of gross receipts and claimed various
deductions relating to Aspiring Artists.
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