Kelvin & Arlene Jackson - Page 2




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                       MEMORANDUM FINDINGS OF FACT AND OPINION                        

               WHERRY, Judge:  This case is before the Court on a petition            
          for judicial review of a notice of deficiency, dated August 12,             
          2004, that determined deficiencies of $6,795 and $77 for taxable            
          years 2000 and 2001, and a section 6662 accuracy-related penalty            
          of $1,359 for taxable year 2000.1  Petitioners timely petitioned            
          this Court to review the notice of deficiency.  After concessions           
          by both parties,2 the issues for decision are:                              
               (1) Whether petitioners are entitled to fully or partially             
          deduct, in taxable year 2000, business startup expenditures that            
          were incurred in 1998 and 1999;3                                            


               1Unless otherwise indicated, all section references are to             
          the Internal Revenue Code (Code) of 1986, as in effect for the              
          years in issue, and all Rule references are to the Tax Court                
          Rules of Practice and Procedure.                                            
               2Petitioners concede that they are not entitled to a $5,200            
          deduction for “Disabled Workers [sic] Impair” claimed on their              
          Schedule C, Profit or Loss From Business, for their 2001 taxable            
          year.  Respondent concedes that for taxable year 2000,                      
          petitioners are allowed to claim the following Schedule C                   
          deductions:  (1) $899.57 interest expense; (2) $217 travel                  
          expense; (3) $1,387.44 in other expenses; (4) $1,069 depreciation           
          expense; and (5) $1,620 in educational expenses for University of           
          Texas classes.  Respondent concedes that for taxable year 2001,             
          petitioners are allowed a $1,117 Schedule C deduction for donated           
          books.                                                                      
               3The total amount of startup expenditures that petitioners             
          incurred in 1998 and 1999 and deducted in 2000 is unclear to the            
          Court.  Respondent claimed that petitioners presented                       
          approximately $12,000 in receipts dated 1998 or 1999.                       
          Petitioners offered into evidence receipts dated 1998 or 1999               
          totaling approximately $9,630.  The discrepancy regarding the               
                                                             (continued...)           





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