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6651(a)(1)1 addition to tax of $2,989, and a section 6662(a)
accuracy-related penalty of $12,190.
Prior to or at trial, respondent made several concessions
resulting in a substantial reduction of the determined deficiency
and the elimination of the section 6651(a)(1) addition to tax.
Because of petitioner2 William Halle's contention that the notice
of deficiency was arbitrary and that the burden of proof shifted
to respondent, the concessions made by respondent are fully set
forth below.
On petitioners' Schedule C attached to their 1990 Federal
income tax return, they claimed Schedule C business expenses in
the total amount of $117,871. During the examination of their
return, respondent allowed in full the amounts claimed for
repairs, travel, meals and entertainment, which totaled $4,026.
For all the remaining categories of expenses claimed on the
return, respondent determined in the notice of deficiency that
petitioners were entitled to Schedule C expenses in the amount of
$63,013 and disallowed $50,832. During the preparation of this
case for trial, respondent increased the amount of Schedule C
expenses to which petitioners were entitled by $6,072.91 and
1 Unless otherwise indicated, all section references are
to the Internal Revenue Code in effect for the taxable year 1990,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
2 Subsequent references herein to petitioner individually
are to William W. Halle IV.
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