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Petitioner produced records at trial supporting a $5,498
deduction for his employee business vehicle expenses and $6,951
for his wife’s car and truck expenses.
Based on petitioner’s substantiation offered at trial,
respondent conceded that petitioner is entitled to the increased
amounts for his employee business vehicle expenses and for his
wife’s car and truck expenses.
Prior Year Loss per Settlement
Background
Petitioner claimed $5,779 on Schedule C of his 1999 return
described as “prior year loss per settlement”. Of that amount,
$5,433 represented petitioner’s wife’s claimed loss, the
disallowance of which was agreed to in the settlement of
petitioner’s 1998 case. Petitioner claimed the loss for 1999 in
the belief that in the settlement of the 1998 tax liability,
respondent had agreed that petitioner could claim the $5,433 for
1999. Respondent had disallowed petitioner’s wife’s 1998 claimed
loss on the ground that the activity was not yet a business and
the loss, therefore, represented startup costs. Respondent also
disallowed the same $5,433 loss claimed for 1999 on the basis
that it was not allowable for 1999 and because respondent did not
agree in the 1998 settlement that the loss was allowable for
1999.
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Last modified: May 25, 2011