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petitioners reported $327.79 in gross sales and claimed cost of
goods sold (CGS) of $19,887.57. Respondent allowed only $1,520
of the claimed CGS.6
To substantiate their CGS, petitioners presented at trial an
invoice from Steck-Vaughn Co., dated April 21, 1998, for 1,000
copies of Champions of Change (Biographies of Famous Black
Americans), for a total cost of $2,359.85. Petitioners also
presented an invoice from Winston Derek Publishers Group, Inc.,
dated February 8, 1999, for a total cost of $525.56 for 56 copies
of Howling Against the Wind. Additionally, petitioners presented
Travelers Express Co., Inc. Drawers (Travelers Express) receipts
with a combined total of $707.7 The Travelers Express receipts,
which provided only the date and amount, contained handwritten
5(...continued)
Kelvin Jackson’s (Mr. Jackson) 2000 Schedule C-EZ, Net Profit
From Business, and 2001 Schedule C deductions are not at issue.
Accordingly, all references to Schedule C deductions are to those
for Hansie Productions.
Mr. Jackson reported on his 2000 Schedule C-EZ a net profit
of $3,348.45 from his business of “News Paper [sic] Deliverer”.
As a result, line 12 of petitioners’ 2000 joint Form 1040 lists
$42,147.82 as their net business loss.
6Respondent’s notice of deficiency indicates that $18,367 of
the claimed $19,887.57 CGS was disallowed in 2000, which would
leave $1,520.57 as allowable. The Court notes that amount should
have been rounded to $1,521, not $1,520.
7The Travelers Express receipts were dated Dec. 27, 1999,
and Mar. 10 and 19 and Aug. 25, 2000, bearing amounts of $57,
$200, $200, and $250, respectively.
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