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Hopkins’s unidentified expenditures of $10,179 that petitioners
claimed as advertising expenses in Mr. Hopkins’s sole proprietor-
ship’s Schedule C.12 Based upon respondent’s examination of Mr.
Hopkins’s S Corporation’s 1999 Form 1120S, respondent also
disallowed in the notice the nonpassive loss of $103,150 from Mr.
Hopkins’s S Corporation that petitioners claimed in petitioners’
Schedule E.13 Respondent further determined in the notice that
petitioners are liable for 1999 for the accuracy-related penalty
under section 6662(a).
OPINION
The parties do not address section 7491(a). Since the year
at issue is 1999, we presume that section 7491(a) is applicable
in the instant case. On the record before us, we find that
petitioners have failed to carry their burden of establishing
that they satisfy the applicable requirements of section
11(...continued)
$5,144) is equal to approximately 4 percent of the $128,610 of
gross receipts reported in Mr. Hopkins’s sole proprietorship’s
Schedule C.
12Petitioners concede, inter alia, respondent’s determina-
tion to disallow in the notice certain deductions claimed in Mr.
Hopkins’s sole proprietorship’s Schedule C, including the disal-
lowance of $5,035 of Mr. Hopkins’s unidentified expenditures of
$10,179.
13As discussed above, the nonpassive loss of $103,150 from
Mr. Hopkins’s S Corporation claimed in petitioners’ Schedule E
was equal to the sum of (1) Mr. Hopkins’s S Corporation’s claimed
1999 ordinary loss of $36,066 and (2) Mr. Hopkins’s automobile
racing expenditures of $67,084 claimed in Statement SBE included
as part of petitioners’ 1999 joint return.
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