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contrary. See sec. 6001; sec. 1.6001-1(a), (e), Income Tax
Regs.2
Some of the receipts and invoices petitioners provided have
no plausible connection to any trade or business and are clearly
nondeductible personal expenses under section 262. For example,
petitioners seek to deduct the cost of installing a wireless
fencing system for their dog. There are also numerous other
expenses which are likely personal with respect to which
petitioners have provided inadequate explanations concerning
their business purpose. These expenses include gasoline and car
washes for petitioners’ family cars, as well as various travel
expenses. Petitioners introduced into evidence groups of
receipts and summaries for the travel expenses, and these
summaries contained notations concerning the alleged business
purpose of the travel. The notations for a July 1994 trip to
Vail, Colorado, indicate that the purpose was a “Search2000 Board
of Directors meeting”. However, Search2000 was not incorporated
2Sec. 7491 does not apply in this case because the
underlying examination began before July 22, 1998, see Internal
Revenue Service Restructuring and Reform Act of 1998, Pub. L.
105-206, sec. 3001(c), 112 Stat. 727, when petitioners were
notified by letter dated July 16, 1997, that their application
for tentative refund was under examination. We note that, had
sec. 7491(a) applied, it would not have shifted the burden of
proof to respondent because petitioners have not maintained
adequate books and records and have not substantiated the amounts
shown on their return. Sec. 7491(a)(2). The burden of proof
remains on petitioners to show respondent’s determinations in the
notice of deficiency to be in error. See Rule 142(a).
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Last modified: May 25, 2011