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accuracy-related penalty under section 6662(a) of $582 in
petitioner’s 1998 Federal income tax. After a concession by
petitioner of his failure to report income from a State income
tax refund in the amount of $3,603, this Court must decide: (1)
Whether petitioner is entitled to deduct expenses claimed on
Schedule C, Profit or Loss From Business, and (2) whether
petitioner is liable for the accuracy-related penalty under
section 6662(a).
Some of the facts in this case have been stipulated and are
so found. Petitioner resided in San Francisco, California, at
the time he filed his petition.
During taxable year 1998, petitioner Wing Y. Kwan
(petitioner) was employed full-time as an electrical engineer by
the State of California. He purportedly was involved in a travel
agent business and in a computer-assisted design business. In
connection with these purported businesses, petitioner attached a
Schedule C to his 1998 Form 1040, U.S. Individual Income Tax
Return. Respondent disallowed deductions claimed on the Schedule
C because petitioner did not establish that the claimed expenses
in excess of the amounts allowed were ordinary and necessary
business expenses paid or incurred in 1998.
On the Schedule C, petitioner reported gross income of $-0-
and a net loss of $29,632. Respondent disallowed deductions
claimed on that Schedule C for car and truck expenses of $1,395,
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