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The issues remaining for decision are:
(1) Are petitioners entitled for each of the taxable years
at issue to the depreciation deduction that they claim? We hold
that they are not.
(2) Are petitioners entitled for the taxable year 1998 to a
deduction of $14,686 for travel expenses? We hold that they are
not.
(3) Are petitioners liable for each of the taxable years at
issue for the accuracy-related penalty under section 6662(a)1?
We hold that they are.
FINDINGS OF FACT
Most of the facts have been stipulated and are so found.
Petitioners resided in Falmouth, Virginia, at the time they
filed the petition in this case.
In 1988, petitioners formed TG&C Associates, Inc. (TGC), an
S corporation, that at all relevant times provided consulting
services to various corporate and government entities. At all
relevant times, TGC’s principal place of business was located in
petitioners’ residence.
During the taxable years at issue, petitioners were the only
two stockholders of TGC. For each of the taxable years at issue,
each petitioner had a zero basis in the TGC stock that each
1All section references are to the Internal Revenue Code
(Code) in effect for the years at issue. All Rule references are
to the Tax Court Rules of Practice and Procedure.
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