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Schedule C clearly state that Form 4562 must accompany the tax
return. See 2000 Instructions for Schedule C, Profit or Loss
From Business, General Instructions, Other Schedules and Forms
You May Have To File, and Line 13, Depreciation and Section 179
Expense Deduction; 2000 Instructions for Form 4562, Part I–-
Election to Expense Certain Tangible Property (Section 179).
Furthermore, petitioners claimed CGS of $19,887.57, while
reporting only $327.79 in gross receipts, which the Court
concludes “would seem to a reasonable and prudent person to be
‘too good to be true’ under the circumstances”. See sec. 1.6662-
3(b)(1)(ii), Income Tax Regs. Overall, for taxable year 2000,
petitioners failed to keep adequate books and records and to
substantiate items properly. See sec. 1.6662-3(b), Income Tax
Regs. The Court concludes that petitioners acted negligently
with regards to their 2000 joint Form 1040. They failed to
substantiate, and ascertain the correctness of, many of their
claimed deductions. Accordingly, the Court sustains respondent
on this issue.
IV. Petitioners’ Motion for Sanctions
Rule 104(c) provides that if a party fails to obey an order
of the Court involving certain discovery matters, then the Court
may make such orders as to the failure as are just. Such orders
may include, but are not limited to, “An order striking out
pleadings or parts thereof, or staying further proceedings until
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Last modified: March 27, 2008