Augusto & Maria Negret - Page 9

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               We noted that the tax return showed the $24,855 but did not            
          show what items were covered by that amount, nor did it indicate            
          the costs, acquisition dates, and specific business uses of any             
          of these items.  When Maria took the witness stand, we urged her            
          to testify about the most expensive items first.  After Maria               
          testified about a computer, two desks, a printer, a scanner, a              
          fax machine, and a telephone, including testimony about these               
          items’ original costs, aggregating about $4,000, the following              
          colloquy occurred:                                                          
                    THE COURT:  How are you going to get to $24,800                   
               some odd dollars if you’re already getting to shall we                 
               say small potatoes items like $35 items?                               
                    THE WITNESS:  I don’t have anything to go to                      
                    THE COURT:  Are there any other big items that you                
               want to tell us about.                                                 
                    THE WITNESS:  No, sir.                                            
               Petitioners did not call their tax return preparer to the              
          witness stand to explain any components of the $24,855 item on              
          the tax return that she had prepared for petitioners to file.               
               From the foregoing, we conclude that there was no foundation           
          for the depreciation claims on petitioners’ 2003 tax return.                
               Nevertheless:  (1) Respondent has conceded that Maria had a            
          real Schedule C business and agrees that petitioners are entitled           
          to deduct the net losses from that business against their other             
          income, see supra table 1; (2) petitioners impressed us as being            

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