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Petitioners filed a joint Federal income tax return for
taxable year 1999. On their return, petitioners claimed
miscellaneous itemized deductions for expenses of $32,089. These
expenses were for unreimbursed employee business expenses of $154
and “other expenses” of $31,950. The “other expenses” were for
“safe deposit box, invest., professional, misc.” Petitioners
also filed a Schedule C, Profit or Loss From Business, which
listed RRI as the name of the business and petitioner as the
proprietor thereof. Petitioners reported zero income from RRI,
and they claimed deductions for car and truck expense of $2,200,
commission and fee expense of $10, and supply expense of $450.
In the notice of deficiency, respondent’s sole adjustment
was to disallow in full the miscellaneous itemized deductions.
In his answer, respondent asserts that petitioners are not
entitled to deduct the expenses claimed on the Schedule C.
Respondent admits in his answer that the notice of deficiency is
incorrect insofar as it did not allow petitioners a standard
deduction of $8,9001 in lieu of their allowed itemized deductions
of $8,157.
Petitioners argue that they are entitled to miscellaneous
itemized deductions for the following expenses:
1Petitioners are entitled to the standard deduction of
$7,200 for joint filers, plus an additional amount of $1,700 for
taxpayers aged 65 or over. Sec. 63(c), (f); Rev. Proc. 98-61,
sec. 3.05(1), (3), 1998-2 C.B. 811, 815.
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