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respondent's disallowance of net operating loss carryovers and
Schedule C deductions claimed by petitioner in connection with
his drill rig activities.
As a result of respondent's concession on an unrelated issue
brought up by petitioner's amendment of his 1990 return, the only
issues remaining for decision relate to the deficiency and
penalty for 1991, viz: (1) Whether petitioner, in 1986, was
engaged in a trade or business under section 162, so as to be
entitled to a $25,547 net operating loss carryover from 1986; (2)
whether petitioner, in 1991, was entitled to deduct expenses of
$6,471 as (a) ordinary and necessary trade or business expenses
under section 162 or (b) expenses "for the management,
conservation, or maintenance of property held for the production
of income" under section 212(2); and (3) whether petitioner is
liable for a negligence penalty under section 6662.
We hold: (1) Petitioner was engaged in a trade or business
in 1986; (2) petitioner (a) was not engaged in a trade or
business in 1991, but (b) did incur expenses in connection with
property held for the production of income within the meaning of
section 212; and (3) petitioner is not liable for a negligence
penalty under section 6662.2
Rule references are to the Tax Court Rules of Practice and
Procedure.
2See appendix for rulings on evidentiary objections.
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