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Respondent determined a deficiency of $25,662 in
petitioners’ Federal income tax and an accuracy-related penalty
under section 6662(a) of $5,132.40 for the 1999 taxable year.
After concessions,1 the issues for decision are: (1) Whether
amounts paid by petitioners on behalf of a corporation are
allowable as an itemized deduction for unreimbursed employee
expenses; (2) whether other amounts paid by petitioners on behalf
of a corporation are allowable as Schedule C deductions; (3)
whether petitioners are entitled to an ordinary loss under
section 1244; and (4) whether petitioners are liable for the
accuracy-related penalty under section 6662(a).
1 Petitioners concede that they are not entitled to a
depreciation and sec. 179 expense deduction of $1,150 claimed on
Schedule C, Profit or Loss From Business, for petitioner DeClerk.
Petitioners further concede that they are not entitled to a
deduction for an unreimbursed employee expense of $1,709 claimed
on Schedule A, Itemized Deductions. The depreciation and sec.
179 expense of $1,150 and the unreimbursed employee expense of
$1,709 were incurred as part of petitioner DeClerk’s employment
with IONA Senior Services during the 1999 taxable year. The
unreimbursed expense of $1,709 comprised a vehicle expense of
$559 and vehicle depreciation of $1,150, the latter of which
duplicates the depreciation and sec. 179 expense deduction
claimed on her Schedule C. In the notice of deficiency,
respondent determined that the vehicle expense and depreciation
should be treated as a charitable contribution deduction of $269.
At the time of trial, petitioners conceded this determination.
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