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Respondent determined deficiencies of $13,627 and $12,787 in
petitioners’ Federal income taxes for 1999 and 2000,
respectively.2 The issues for decision are: (1) Whether
petitioners are entitled to deductions for trade or business
activities in connection with a legal/medical consultation
activity of Rick D. Lamb (petitioner); (2) whether salary income
earned by petitioner as an employee can be considered as trade or
business income of the legal/medical consultation activity; and
(3) whether petitioner is entitled to a deduction for job search
expenses.
Some of the facts were stipulated. Those facts, with the
annexed exhibits, are so found and are made part hereof.
Petitioners’ legal residence at the time the petition was filed
was Portland, Oregon. During the years at issue, petitioners
were residents of Helena, Montana.3
2Rick D. Lamb (petitioner) and Susan L. Story were married
to each other during the years in question but were divorced at
the time of trial. Susan L. Story did not appear at trial.
Petitioner advised the Court that his former spouse had knowledge
of the trial and agreed that petitioner would present the case on
their joint behalf. Respondent did not move to dismiss for
failure to prosecute as to Susan L. Story.
3Generally, the burden of proof is on the taxpayer to show
that the determinations in the notice of deficiency are in error.
Rule 142(a). Sec. 7491, under certain circumstances, shifts the
burden of proof to the Commissioner. However, for the burden to
be placed on the Commissioner, the taxpayer must comply with the
substantiation and record-keeping requirements of the Internal
Revenue Code. Sec. 7491(a)(2)(A) and (B). On this record,
petitioners have not wholly satisfied that requirement;
(continued...)
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