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Petitioners maintained computer records for the disputed
deduction items. Those items included deductions claimed on
Schedules C and separate home office expenses. We decided that
petitioners were not entitled to home office deductions. We also
decided that petitioners were not entitled to itemized deductions
in excess of those respondent conceded. We note that the amount
of itemized deductions respondent conceded represented
substantially all of the home office deductions petitioners
claimed. With respect to petitioners’ claimed Schedule C
deductions, we found that petitioners were not entitled to them
because of the characterization of petitioner’s relationship with
IBC as an employee, rather than as an agent or self-employed
individual.6 That characterization is based on complex concepts.
Under the circumstances, we hold that petitioners acted with
reasonable cause and in good faith. Accordingly, petitioners are
not liable for a section 6662(a) penalty for 1997 or 1998.
To reflect the foregoing,
Decision will be entered
under Rule 155.
6 It also appears that a small portion of the deductions
petitioners claimed on their Schedules C was conceded by
respondent.
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