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belonged in that category because they provided engineering
services or certifications as shown in their invoices; however,
Operating Engineers was the union for the concrete pump truck
operators. In the check registers, the payments to Operating
Engineers were categorized as “Subcontractors”. According to the
interrogatory responses, items categorized as “Subcontractors”
were part of the cost of goods sold.
Although we find it likely that the payments claimed by
petitioners were in fact made for legal and engineering costs,
those fees may already be included in petitioner’s Schedule C as
a part of cost of goods sold. Also, to the extent that those
fees were for services performed for BBT and not B&B, they are
not deductible by petitioners.2 Petitioners provide no
information on those components that make up the cost of goods
sold amount claimed on the Schedule C, nor do they distinguish
fees paid by B&B from those paid by BBT. In the light of this
absence of evidence, the credible evidence in the record does not
permit us to find that the outside services deduction is
supportable as an independent Schedule C deduction.
2For example, a fee for legal services, dated June 1, 2001,
is directed to “BBT Enterprises dba B & B Construction”,
indicating that BBT had already set itself forth as a business
entity by that date.
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Last modified: November 10, 2007