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and production of documents on March 22, 2000. At the hearing on
these motions, the Court ordered petitioners to respond to the
interrogatories in writing by March 31, 2000, or the answers
provided orally in Court at such hearing would be deemed
petitioners’ answers. The Court also ordered petitioners to
produce to respondent by March 31, 2000, all documents
petitioners intended to use at the trial. Any documents not
produced would not be permitted to be used at trial. Petitioner
stated that he contested only the Schedule C deductions for 1990.
Petitioners did not provide further written answers to the
interrogatories, nor did they produce additional documents.7
Respondent argued in a trial memorandum and at trial: (1)
Petitioners are not entitled to the various Schedule C deductions
because they failed to substantiate the amounts claimed; and (2)
as to the interest deductions, respondent reclassified the home
mortgage interest as investment interest, and then disallowed
part of the interest deduction pursuant to section 265(a)(2). At
trial, respondent argued for the first time that part of the
7 Despite the Court’s rulings, the parties presented
evidence and testified about issues which appear to have been the
subject matter of the discovery proceeding. Petitioner and
respondent raised the omitted income and interest issues at
trial. We deem the issues to have been tried by consent and
properly before this Court.
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