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Revenue Code in effect for the year in issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
Respondent determined a deficiency in petitioners’ 2000
Federal income tax of $2,115. After concessions by the parties,1
the issues for decision are: (1) Whether petitioner David
Sears’s sales activity was engaged in for profit, and (2) if the
activity was engaged in for profit, to what extent petitioners
have substantiated the expense deductions claimed on their
Schedule C, Profit or Loss From Business.2
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts, supplemental stipulation of facts, and
the attached exhibits are incorporated herein by this reference.
Petitioners are married and resided in Oroville, California, at
the time they filed their petition.
1 Petitioners concede the following Schedule C, Profit or
Loss From Business, expenses: $100 of commissions and fees
expense, $1,322 of employee benefit programs expense, $31 of
other interest expense, and $12 of taxes and licenses expense.
They also concede that petitioner David Sears received $768 of
nonemployee compensation. Respondent concedes that petitioners
paid $10,149 of home mortgage interest and $1,115 of real estate
taxes.
2 Petitioners now claim additional expense deductions
beyond those claimed on their Schedule C. Based on our
resolution of the first issue in this case, infra, we need not
address whether they are entitled to deduct additional Schedule C
expenses. Respondent also adjusted petitioners’ Schedule A,
Itemized Deductions, for mortgage interest paid and property
taxes paid. These adjustments are computational; therefore, we
need not address them.
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