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the borrower but are advanced by the lender, or the proceeds of
the loan are reduced by the amount of the points, the taxpayer is
not considered to have paid the deferred interest, and,
therefore, the points are not deductible under section 461(g).
Schubel v. Commissioner, 77 T.C. 701 (1981). Respondent,
therefore, is sustained on this issue.
The fourth issue relates to the itemized deduction claimed
by petitioners on their 1998 return for real estate taxes in the
amount of $4,154. During the trial, respondent conceded
petitioners' entitlement to a deduction of $1,570 for such taxes.
Petitioners presented no evidence to establish a payment of such
taxes in excess of the amount conceded by respondent.
Petitioners, therefore, are not entitled to a deduction for real
estate taxes in excess of $1,570 for 1998.
The fifth issue relates to the trade or business activity
conducted by Mrs. Satriana during 1999 as a Mary Kay consultant.
On Schedule C of their 1999 return, petitioners reported gross
receipts of $2,300, no cost of goods sold, and gross income of
$2,300. The expenses deducted were:
Car and truck $2,636
Supplies 4,232
Travel 300
Meals and entertainment 30
Utilities 250
Total $7,448
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