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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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