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During the taxable year 2000, petitioner received wages,
unemployment compensation, and a distribution from an individual
retirement account (IRA) totaling $34,025. Petitioner does not
contest that he received these amounts or that they are
includable in his gross income. However, at trial, petitioner
raised the issue of his entitlement to two loss deductions.
On October 8, 2000, petitioner filed articles of
incorporation with the secretary of the Commonwealth of
Pennsylvania for Huntley Quality Assurance, Inc. (HQA). In
September 2000, HQA entered into a general Contractor agreement
with Howard Systems International, Inc. (Howard Systems, Inc.),
for petitioner to provide software support services at Wyeth-
Aryst Pharmaceutical from September 25, 2000, through March 25,
2001. Petitioner worked at Wyeth-Aryst Pharmaceutical from
September 24 through October 8, 2001, for a total of 59.5 hours
at $80 an hour.
Petitioner did not timely file his 2000 Federal income tax
return. Respondent prepared a substitute return calculating
petitioner’s tax liability for 2000. Respondent issued a notice
of deficiency based upon amounts reported as paid to him by
payors, using the filing status of married filing separately. In
his calculation, respondent allowed the standard deduction of
$3,675 and a personal exemption allowance of $2,800.
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