Kelvin & Arlene Jackson - Page 3




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               (2) whether petitioners had cost of goods sold of $18,367.57           
          for taxable year 2000;                                                      
               (3) whether petitioners are entitled to expense $6,902.80 in           
          depreciable business assets purchased in taxable year 2000;                 
               (4) whether petitioners are entitled to claim Schedule C               
          deductions in excess of the $5,193.10 and $14,936, for 2000 and             
          2001, respectively, that respondent has previously allowed or               
          conceded;4                                                                  
               (5) whether petitioners are liable for the section 6662                
          accuracy-related penalty for taxable year 2000;                             
               (6) whether to grant petitioners’ motion to impose sanctions           
          on respondent pursuant to Rule 104(c).                                      
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated by the parties.  The            
          stipulations, with accompanying exhibits, are incorporated herein           
          by this reference.  At the time the petition was filed                      
          petitioners resided in Austin, Texas.                                       


               3(...continued)                                                        
          amount of petitioners’ startup expenditures is moot as the Court            
          concludes, infra, that petitioners are not entitled to deduct               
          their startup expenditures.  The Court notes that petitioners               
          claimed $45,496.27 in Schedule C deductions for 2000 and were               
          unable to substantiate most of those deductions.                            
               4The Court notes that in calculating their 2001 Schedule C             
          expenses petitioners made an error that respondent did not                  
          notice.  See infra note 12.  The $14,936 amount is based on the             
          Court’s calculation, correcting for the error, of the Schedule C            
          expenses allowed or conceded by respondent.                                 





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