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Thus, petitioners claimed a net loss of $5,148.
In the notice of deficiency, respondent disallowed all the
claimed deductions for lack of substantiation and determined a
self-employment tax liability based on $7,448. Respondent
conceded that this computation was in error, and that the self-
employment taxes should have been calculated on the determined
net profit, $2,300, with allowance of a deduction of one-half of
such taxes under section 164(f).
Mrs. Satriana did not present at trial any accounting books
or records of her income or expenses for this activity. She
presented copies of several invoices for the purchase of
merchandise from Mary Kay during 1999 and copies of two checks
totaling $69.62 for telephone expenses. No other documentation
or supporting evidence was presented. The Court is satisfied
that petitioner did purchase sales merchandise for her activity,
and that no deduction from gross income was claimed on the return
for cost of goods sold. No documentation or explanation was
offered as to the $4,232 expense deduction for "Supplies", which
respondent disallowed. The Court is satisfied that some expense
was incurred in the generation of the $2,300 reported gross
income, and, pursuant to Cohan v. Commissioner, supra, the Court
holds petitioners are entitled to deduct unspecified expenses of
$700 for 1999. No portion of this allowed amount, however, is to
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