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their petition, petitioners did not address this underlying
adjustment in the petition, at trial, or in their brief. We
therefore consider the issue to have been abandoned by
petitioners.
The sole dispute in this case is whether petitioners are
entitled to the Schedule C deductions claimed in 1994. If
petitioners are entitled to the deductions, they are also
entitled to the NOL carryback to 1991. Petitioners’ primary
arguments at trial and in their brief can be summarized as
follows: Petitioner was engaged in a trade or business outside
of the corporations that he owned, and the Schedule C expenses
are his individual expenses rather than those of a corporation;
or, in the alternative, because Navis was an S corporation, all
of its expenses should have passed through to petitioner,
allowing petitioners to deduct those expenses on their individual
return. Petitioners also argue that they are entitled to
Schedule C deductions in amounts greater than those claimed on
their return.
A taxpayer generally may not deduct personal, living, and
family expenses. Sec. 262(a). Expenses that are ordinary and
necessary in carrying on a trade or business of the taxpayer, on
the other hand, generally are allowed as deductions to the
taxpayer in the year in which they are paid or incurred. Sec.
162(a). A taxpayer is engaged in a trade or business if the
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