Mila Alemasov and Victor Popov - Page 13




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          Visa credit cards.  On their Chevron credit card, petitioners               
          incurred monthly finance charges every month during 2002.  The              
          five Visa credit card statements show, along with interest and              
          finance charges, transactions at Kinko’s, Safeway, Whole Foods              
          Market, and Bally Total Fitness, among other places, indicating             
          that the interest related substantially to credit card charges              
          for personal purposes.                                                      
               Section 262 expressly disallows deductions for personal,               
          living, or family expenses.  Petitioners failed to substantiate             
          that any interest expense associated with the credit card charges           
          was other than a nondeductible personal expense.  No portion of             
          the interest was shown to be related to the real estate activity.           
          The claimed interest, therefore, is not allowed as a deduction.             
          Office Expenses                                                             
               Petitioners offered monthly credit card statements and                 
          copies of two checks to substantiate the $1,689 for office                  
          expenses.  Absent further corroborating evidence to support these           
          expenses and their relationship to the real estate activity, the            
          Court sustains respondent’s disallowance of these expenses.8                

               8The $1,689 also included what appear to be utility expenses           
          attributed to two vendors or service providers listed as “PG&E”             
          and “Water”.  Regardless of their classification, petitioners did           
          not establish that those expenses were related to the real estate           
          activity or were other than personal.                                       
               Petitioners also claimed as office expenses cellular phone             
          charges to T-Mobile.  Cellular phones are classified as listed              
          property under sec. 280F(d)(4)(A)(v), and petitioners offered no            
                                                             (continued...)           






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