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respondent that they had treated the lease of the van as a
purchase and not as a lease. At trial, however, petitioner
testified that in subsequent years the lease was treated as a
lease and not as a purchase, and that petitioners were not
entitled to depreciation on the van. Consequently, respondent
concedes part of the loss claimed on petitioners' 1990 Federal
income tax return for the trade-in of the Chevrolet Cavalier for
the van.
In the notice of deficiency, respondent determined that
petitioners were liable for an addition to tax under section
6651(a)(1) in the amount of $2,989. However, in the stipulation
of facts, respondent conceded that petitioners timely filed their
1990 Federal income tax return and, consequently, are not liable
for that addition to tax.
In the notice of deficiency, there is an adjustment to
petitioners' self-employment tax, which was increased by
respondent. There is no dispute as to whether petitioner's net
earnings from his Locksmith/Burglar Alarm business are subject to
self-employment tax. That adjustment is computational.
In addition, respondent adjusted petitioners' medical
expenses deduction. There is no dispute as to whether
petitioners incurred the medical expenses claimed on the return.
That adjustment is also computational.
Petitioner, in his answering brief, has raised two
preliminary issues, namely, whether respondent should bear the
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