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10. Conclusion
We conclude that petitioners may not deduct more Schedule C
expenses for petitioner’s consulting activity for the years in
issue than allowed by respondent.3
D. Whether Petitioners Are Entitled to More Itemized Deductions
Than Respondent Allowed
1. Susan Fairey’s Employee Business Expense Deductions
Petitioners contend that they may deduct unreimbursed
employee business expenses of $2,277.90 for 1999, $2,686.49 for
2000, and $965.37 for 2001 for Susan Fairey.4 Petitioners
contend that it is reasonable for them to deduct those amounts
because they equal 28 percent of petitioners’ total expenditures
for 1999, 30 percent for 2000, and 16 percent for 2001.5 We
disagree. Petitioners have not given any convincing
justification for basing their deductions on these percentages.
Hughs asked petitioners how much Susan Fairey spent for her
classroom. Petitioners did not timely produce any records except
some canceled checks payable to retailers that sell items that
3 In light of this conclusion, we need not decide whether
petitioner operated his consulting activity for profit.
4 Teachers may deduct up to $250 for unreimbursed education
expenses as above-the-line deductions for tax years beginning in
2002 or 2003. Sec. 62(a)(2)(D). For the years in issue, those
expenses were deductible only to the extent unreimbursed employee
business expenses and other itemized deductions exceeded 2
percent of adjusted gross income.
5 The total of petitioners’ business expenditures for 2001
is not in evidence.
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