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Revenue Code in effect for the years in issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
Respondent determined deficiencies in petitioners’ Federal
income taxes of $7,297 in 1995 and $8,355 in 1996 and section
6662(a) accuracy-related penalties of $1,459.40 and $1,646,
respectively. After concessions by both parties,1 the issues for
decision are: (1) Whether petitioners received unreported income
of $8,355 in 1996; (2) whether petitioners are entitled to the
claimed deductions for advertising expenses in 1995 and 1996; and
(3) whether petitioners are liable for accuracy-related penalties
for 1995 and 1996 under section 6662(a).
Some of the facts have been stipulated and are so found.
Petitioners resided in Odessa, Florida, at the time they filed
their petition.
Background
Petitioner Peter Possas (Mr. Possas) worked as a manager at
a Nissan automobile dealership during the years at issue. His
wages in 1995 totaled $108,867.57 and in 1996 totaled $92,657.87.
Mr. Possas paid for flyers to advertise the automobile
dealership. The dealership had advanced him money to pay for a
1 Respondent conceded the claimed employee business expense
deduction for 1995 of $5,156.60. Respondent conceded that
petitioners did not have unreported income in 1995. Petitioners
conceded receipt of a taxable award from Mr. Possas’s employer in
1996 of $2,637. Petitioners conceded that they were not entitled
to a deduction for the “unidentified expenses” claimed on their
1995 return of $8,532.
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