Dale H. Sundby and Edith Littlefield Sundby - Page 12

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          contrary.  See sec. 6001; sec. 1.6001-1(a), (e), Income Tax                 
               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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