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During 1998, petitioner also operated PK Production and
Management (PK Production), a small business providing music
entertainment services. Petitioner managed and played in a band
for compensation. For the year at issue, the band only
participated in four or five paid engagements.
With respect to PK Production, petitioner claimed that on
January 1, 1998, he placed in service a 1995 Dodge Caravan (van),
which was purchased in 1997. During the year at issue,
petitioner used the van to transport musical equipment to and
from the band’s engagements. Petitioner testified that during
1998 the van was used primarily for PK Production business
purposes.
On Schedule C, petitioner claimed various business expense
deductions in the operation of PK Production. Petitioner’s
claimed expense deductions that are at issue include: (1) A
section 179 expense deduction of $7,000 for the van; (2) expenses
in connection with the van for business-related travel of $4,182;
(3) production and management fees of $999.20; and (4) music
educator and professional convention expenses of $333.95.
During 1998, petitioner owned a three-bedroom ranch-type
house located at 5134 Heatherbrook Drive, Houston, Texas. On
September 11, 1998, a rain and wind storm damaged the roof and
several rooms of petitioner’s house. Petitioner reported the
incident to the State Farm Insurance Company (State Farm), with
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