- 3 -
a different department. His position also changed from quality
control to manufacturing engineer. The terms of Mr. Ferrada's
employment remained open-ended.
At the end of 1997, Mr. Ferrada moved his wife and son to
Del Rio, Texas. Mrs. Ferrada and their son lived rent-free in a
mobile trailer owned by Mrs. Ferrada's parents. Mr. Ferrada
continued to work in Lake Charles. In December 1998,
anticipating long-term employment, Mr. Ferrada moved his family
to Lake Charles. He continued to work on the project through
1999.
2. Concession Stand
In May 1998 petitioners purchased a concession stand for
approximately $4,000. During 1998, petitioners had gross
receipts of $710 from the concession stand which they did not
report on their tax return. They also incurred $2,315 of
expenses.
Petitioners' Individual Income Tax Return for 1998
On April 14, 2000, petitioners jointly filed with the
Internal Revenue Service a Form 1040, U.S. Individual Income Tax
Return, for tax year 1998. Attached to the return was a Schedule
A, Itemized Deductions, and a Schedule C. The Schedule C
reported zero business income, expenses of $48,612, and a net
loss of $48,612.
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