Robert L. and Brenda J. Tarter - Page 11

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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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