-28-
for that payment. We also note that petitioners never
intermingled their funds in a joint account, but kept their
financial accounts separate, and that petitioners’ relationship
throughout the subject years was one in which they each
understood that they were responsible for the payment of their
share of the expenses. We hold for petitioners on this item.11
3. VISA advances
Petitioners argue that they are entitled for 1997 to an
adjustment of $2,500 for VISA advances. Respondent concedes that
this $2,500 is not taxable income to petitioners, and we so hold.
4. Sales Tax Remittances
Petitioners argue that they are entitled for 1997 to an
adjustment of $3,800 for sales tax remittances for October and
November 1997. We agree. Michelsen operated the Nature’s Touch
shops as a sole proprietorship from January 1 through
November 23, 1997, and she (as a conduit) collected sales tax on
the sales made at the shops during that time. She deposited the
collected sales tax into the shops’ business account and later
remitted that tax to the State of California. Respondent’s bank
deposits analysis for 1997 made an adjustment for sales tax
11 Whereas we understand petitioners to request that we also
hold that other amounts reported as compensation from NT were
actually loan repayments, we decline to do so. Michelsen was the
sole reported recipient of compensation from NT, and petitioners
make no assertion in this proceeding that Michelsen lent money to
NT.
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