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The issues remaining for decision are:
(1) Is petitioner entitled to deduct certain legal fees in
determining his Schedule C net loss? We hold that he is not.
(2) Is petitioner entitled to deduct certain claimed gifts
to customers and prospective customers? We hold that he is not.
(3) Is petitioner liable for the accuracy-related penalty
under section 6662(a)? We hold that he is.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
Petitioner resided in Falls Church, Virginia, at the time he
filed the petition in this case.
During 1999, McKendree Co., Inc. (McKendree), employed
petitioner as a salesperson. At all relevant times, McKendree
had in effect an employee reimbursement policy (McKendree’s
reimbursement policy) that allowed its employees to request
reimbursement on a prescribed reimbursement form (reimbursement
form) for any employee business expenses that they incurred.
That policy provided in pertinent part:
Any purchase regardless of how small must have a
Purchase Order number (P.O. #) obtained from the Nor-
folk Parts Department and be accompanied by a Pay-
ment/Reimbursement form * * * in order to be reim-
bursed.
Payments to employees for the reimbursement of
expenses, travel, etc., will be made on the 1st and
15th of each month. All employees must complete an
Authorization Payment/Reimbursement form in order to
receive reimbursement * * *
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Last modified: November 10, 2007