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loss of $36,0667 and (2) Mr. Hopkins’s automobile racing expendi-
tures of $67,084 that petitioners claimed as “advertising and
business promotion” in Statement SBE, Supplemental Business
Expenses (Statement SBE), included as part of their 1999 joint
return. In Statement SBE, petitioners indicated that Mr. Hopkins
incurred Mr. Hopkins’s automobile racing expenditures of $67,084
as an “S Corporation Shareholder”.
Respondent conducted examinations of Mr. Hopkins’s S Corpo-
ration’s 1999 Form 1120S and petitioners’ 1999 joint return.
With respect to the examination of the 1999 Form 1120S, respon-
dent determined, inter alia, to disallow $12,729, and to allow
$3,772 as advertising expenses, of Mr. Hopkins’s S Corporation’s
expenditures of $16,501 that Mr. Hopkins’s S Corporation claimed
as a deduction in that form.8 Respondent also determined to
7In determining the amount of Mr. Hopkins’s S Corporation’s
claimed 1999 ordinary loss of $36,066 reported in the 1999 Form
1120S, Mr. Hopkins’s S Corporation deducted from its gross
receipts reported in that form, inter alia, Mr. Hopkins’s S
Corporation’s expenditures of $16,501 and Mr. Hopkins’s S Corpo-
ration’s expenditures of $39,557.
8Of the total of Mr. Hopkins’s S Corporation’s expenditures
of $16,501 that were claimed as a deduction in Mr. Hopkins’s S
Corporation’s 1999 Form 1120S, respondent (1) disallowed
(a) $9,609 as nondeductible loan payments with respect to Mr.
Hopkins’s motor home and (b) $3,130 of Mr. Hopkins’s S Corpora-
tion’s unidentified automobile racing expenditures of $6,620 as
nondeductible personal automobile racing expenditures of Mr.
Hopkins and (2) allowed (a) $3,490 of such unidentified automo-
bile racing expenditures and (b) $282 of advertising (hats)
expenditures (or a total of $3,772) as advertising expenses.
Respondent determined the former amount allowed (i.e., $3,490) as
(continued...)
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