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business, as does the separate return previously filed by
petitioner. According to the Schedules C, the income and
deductions listed on each has been computed in accordance with
the cash receipts and disbursements method of accounting. On
each Schedule C a deduction of $1,522 for meals and entertainment
expenses is claimed. On the Schedule C included with
petitioner’s separate return a deduction of $4,034 for travel
expenses is claimed. At the examination stage the parties
proceeded as though the travel expense deduction was also claimed
on the joint return, even though it was not, and we do likewise.
The deduction for meals and entertainment expenses relates
to those items generally described above. The deduction for
travel expenses relates to airfare, hotel, and local
transportation expenses incurred for two trips to Jamaica, one in
January and one in December. Petitioner described the trips as
“exploratory, investigative in nature” taken “because [he] was
attempting to get into * * * a real estate investment prospect”
that “did not reach fruition.” Petitioner now concedes that
expenses totaling $2,430 incurred in connection with the December
trip are not deductible.
In a notice of deficiency dated June 30, 2003, respondent:
(1) Disallowed the deduction for meals and entertainment
expenses; (2) in effect, disallowed the deduction for travel
expenses for the Jamaican trips; and (3) imposed an addition to
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Last modified: May 25, 2011