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Respondent did not make a naked assessment. The rule of
Helvering v. Taylor is not properly invoked in this case.
II. Rental Expenses
A. Introduction
On the 1994 tax return, petitioner deducted $32,244.12 for
rents paid (the deduction for rents). By the notice, respondent
disallowed the deduction for rents, explaining that petitioner
had failed to establish that the amount deducted constituted an
ordinary and necessary business expense, was expended, or was
expended for the purpose designated. The parties have stipulated
that the deduction for rents represents three separate amounts,
as follows:
$7,540 – Rent for space in the Dallas apartment
13,994 – Bethesda apartment expenses
10,710 – Florida expenses
32,244 - Total
B. Dallas Apartment
1. Facts
As stated, the Duquettes made their home in the Dallas
apartment from December 1991 until April 1994. On February 8,
1992, the board of directors of petitioner (sometimes, the board)
resolved that petitioner’s offices be transferred from Maryland
1(...continued)
arbitrary and erroneous. The adjustments in the notice appear to
reflect in substantial part the scope of the examination of the
1994 tax year communicated by Revenue Agent Grimes to petitioner
and forming the basis of Norman’s request for a restricted
consent.
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