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Respondent determined a deficiency of $3,913 in petitioners’
2001 Federal income tax and an addition to tax of $583 under
section 6651(a)(1).2
The issue the Court must decide is whether $15,892 in “other
expenses” that petitioners listed on a Schedule C, Profit or Loss
From Business, attached to their 2001 tax return are “start-up
expenditures” as defined by section 195, resulting in the
disallowance of deductions claimed for those expenditures.3
Background
Some facts have been stipulated and are so found. The
stipulation of facts and the attached exhibits are incorporated
by this reference. When the petition was filed, petitioners
resided in Walnut Creek, California.
Petitioner Robert J. Deward has a master’s degree in
journalism from the University of California, Los Angeles (UCLA).
Mr. Deward worked from 1970 through 1997 as a full-time
2 Although the notice of deficiency refers to an accuracy-
related penalty under sec. 6662(a), respondent concedes that this
was a scrivener’s error by respondent and the notice of
deficiency should have referred to the addition to tax under sec.
6651(a)(1). Respondent has since conceded that petitioners are
not liable for any addition to tax under sec. 6651(a)(1).
3 In the notice of deficiency, respondent adjusted
petitioners’ medical expense deductions and miscellaneous
itemized deductions because of the change in the determined
amount of adjusted gross income. The correctness of these
adjustments depends upon our resolution of the issue stated
above.
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Last modified: November 10, 2007