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Petitioner did not issue Ms. Brownell a Form W-2 in connection
with the manufactured home.
Petitioner filed a Federal income tax return for taxable
year 1998. With this return, he filed a Schedule C, Profit or
Loss From Business, for his general contracting business.
Petitioner reported cost of goods sold of $470,394. As part of
this amount, petitioner included $43,003 for the double-wide
manufactured home. Separately, petitioner claimed deductions on
the Schedule C for wage expenses of $33,576 and for legal and
professional services expenses of $16,149. In the notice of
deficiency, respondent determined that the purchase of the
manufactured home was a nondeductible personal expense and not
properly characterized as a cost of goods sold.2 Respondent also
disallowed $6,610 of the claimed deduction for legal expenses
because they likewise were determined to be nondeductible
personal expenses.
The issues in this case are decided on the basis of the
record without regard to the burden of proof. See sec. 7491;
Rule 142(a).
The first issue for decision is whether petitioner is
entitled to deduct as a business expense the cost of the
2Petitioner no longer argues that the cost of the
manufactured home should be included in the Schedule C cost of
goods sold. Rather, in his brief he argues that he is entitled
to deduct the cost of the home as a business expense.
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