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On her Federal income tax returns for the years at issue,
petitioner claimed deductions for expenses relating to her
employment as a nurse on Schedule A. With respect to her self-
employed activity as a critical care nurse, petitioner claimed
expenses relating to that activity on Schedule C. In the notices
of deficiency, respondent made some adjustments shifting some of
the expenses between the Schedules A and C and, additionally,
disallowing some of the expenses. Petitioner’s objections are
directed to the disallowed expenses rather than the shifting of
expenses between the two schedules.
In 1996, petitioner’s Acura automobile was damaged in an
accident. While it was being repaired, she drove a rented car
provided by her insurance company. The rental car was stolen,
along with equipment in the car that petitioner used in her
critical care nursing activity. The loss of the equipment was
not covered by insurance. Petitioner claimed a casualty loss
deduction of $4,500 on her 1996 income tax return, Schedule 4684,
Casualty Loss, pursuant to section 165(c)(3) but realized no tax
benefit because the amount claimed was less than 10 percent of
her adjusted gross income. Sec. 165(h)(2). Petitioner presented
a list of the stolen equipment at trial, which she valued at
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