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petitioner’s father instructed either to petitioner’s father
directly or to creditors of petitioner’s father.
For the year 1996, petitioner did not provide to the Court
records of any sites visited, dates or hours worked, or mileage
traveled by petitioner’s father. Petitioner and petitioner’s
father never executed a written consulting agreement. Petitioner
did not issue to petitioner’s father a Form 1099-MISC,
Miscellaneous Income, for the $30,000 payment.
D. 1996 Tax Return
Mr. Hathaway prepared U.S. Individual Income Tax Returns for
both petitioner and petitioner’s father for 1996. On his
Schedule C, Profit or Loss From Business, petitioner’s father
claimed a loss of $26,085 from his 7-Eleven business, gross
income of $30,000 for the payment received from petitioner, and
on his Schedule D, Capital Gains and Losses, he claimed a short-
term capital loss of $59,500 from the sale of his 7-Eleven store.
On April 15, 1997, petitioner timely filed his 1996 Federal
income tax return. On his 1996 return, petitioner deducted the
$30,000 paid to petitioner’s father for consulting services.
Respondent issued a notice of deficiency to petitioner
regarding his 1996 tax year. In the notice of deficiency,
respondent determined, inter alia, that petitioner was not
entitled to deduct the $30,000 paid to petitioner’s father in
1996.
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