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Respondent determined a deficiency in petitioner’s Federal
income tax of $3,346 for the taxable year 2000.
After concessions,1 the issues for decision are: (1)
Whether petitioner is entitled to a Schedule C car and truck
expense deduction in excess of the amount allowed by respondent;2
and (2) whether legal fees associated with the settlement of a
legal action are ordinary and necessary business expenses
properly deductible on Schedule C.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. Petitioner resided in Los
Angeles, California, on the date the petition was filed in this
case.
Petitioner graduated from Southwestern University Law School
in Los Angeles, California, in December 1998. Petitioner was
admitted to the State Bar of California on July 26, 2000. Also,
during taxable year 2000, petitioner became a certified public
accountant in the State of California.
1Petitioner concedes that he is not entitled to deductions
claimed on Schedule A, Itemized Deductions, of $3,255.
2Petitioner claimed a car and truck expense deduction of
$5,126 on his 2000 Schedule C, Profit or Loss From Business.
Respondent, in the notice of deficiency, disallowed $2,710 of the
claimed Schedule C car and truck expense deduction. Thus,
respondent allowed petitioner a car and truck expense deduction
for taxable year 2000 of $2,416.
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