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and housing expenses would not be covered. Heather earned only
$1,745 for her performing in Atlanta from April 1 to September
15, 1996. Mr. Carino’s expenditures greatly exceeded that
amount. He did not collect the 10-percent fee stated in the
“Personal Management Agreement”, and Heather has not reimbursed
him for the expenses he incurred. To date, Heather’s earnings as
a dancer are limited to the $1,745 she earned in 1996 as a Coca-
Cola Kid.5
Mr. Carino incurred $17,300 in expenses in Atlanta which
petitioners claimed on a Schedule C, Profit or Loss From
Business,6 attached to their Federal income tax return for 1996.
Those expenses produced a $17,300 loss which petitioners deducted
in computing their taxable income for 1996. Petitioners also
claimed $13,485 as car and truck expenses on a Schedule C that
was filed with respect to Mr. Carino’s profession as an attorney.
Respondent issued a notice of deficiency in which he disallowed
the $17,300 in expenses in its entirety and the car and truck
expenses to the extent they exceeded $6,030 (i.e., respondent
reduced petitioners’ claimed expenses by $7,455). Both the
$17,300 loss and the $7,455 car and truck expenses that
5Mr. Carino testified that he has spent well in excess of
$250,000 on his daughter’s education and training from the ages
of 5 to 18 years.
6The Schedule C, referred to above, lists Mr. Carino’s
principal business or profession as “MANAGER OF PERFORMING
ARTIST”.
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