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We concluded that, in computing petitioners’ taxable income
each year, the cost of the leather goods purchased each year
should be deducted from petitioners’ gross receipts as cost of
goods sold.
b. Mr. Jacobsen’s Clothing Purchases
Mr. Jacobsen claims that he often paid for clothing for the
limousine drivers. Specifically, he claims that he paid $349 in
1987 to Jerry Leonard, a big and tall men’s store, $349 in 1987
and $771 in 1988 to Daytons department store, and $1,950 in 1988
to Merles department store. Respondent treated these items as
Mr. Jacobsen’s personal expenses in computing his income.
Mr. Jacobsen did not call any of the limousine drivers to
confirm that he made such purchases. He offered no sales
receipts or other documentary evidence. We conclude that the
items were properly treated as nondeductible personal expenses.
c. Mr. Jacobsen’s Purchase of a Mobile Telephone
System
In 1987, Top Play purchased a mobile telephone system for
$1,797. Payment for the system was charged to Mr. Jacobsen’s
credit card. Top Play paid the credit card company $1,300 in
1987 and $763 in 1988 for the purchase of the mobile telephone
system. Agent Fisher treated this purchase as a nondeductible
personal expenditure. Respondent concedes that the item is not a
nondeductible personal expense.
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