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Petitioner also carried on an activity of publishing a
visitor’s guide for the geographic area of Mountain View, San
Mateo, Foster City, and Half Moon Bay. Petitioner rented an
apartment for 3 months in San Bruno while conducting this
activity. She also rented furniture for the apartment. The cost
of the furniture rental was $1,000.68. Petitioner incurred some
interest expense and entertainment expense relating to the
activity of publishing the visitor’s guide. Petitioner traveled
sometimes to conduct this activity, but there is nothing in this
record indicating the extent of the travel.
Petitioner filed an individual Federal income tax return for
the taxable year 2001. Petitioner attached to the return a Form
8824, Like-Kind Exchanges. Petitioner reported a realized gain
of $111,715 on the sale of the San Diego condominium and a
deferred gain of the same amount. Petitioner also reported on
Schedule C among other items, rent or lease of vehicle of $1,001,
rent of $6,000, and deductions for interest expense of $4,742.
Petitioner listed the principal business as “Advertising”.
In a notice of deficiency, respondent determined that
petitioner was not entitled to defer the gain on the sale of the
San Diego condominium. Respondent determined that petitioner
should recognize a $86,857 capital gain from the sale of the San
Diego condominium. The notice further disallowed certain
Schedule C deductions as follows: (1) $1,001 in claimed rent or
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