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concession that respondent's adjustments for the losses are
correct is not sufficient to establish that there was no basis in
fact or law for the claimed losses. Purcell v. Commissioner, 86
T.C. 228, 239 (1986), affd. 826 F.2d 470 (6th Cir. 1987).
Respondent concedes that the deduction related to T.A.B.
Production is grossly erroneous.
In the stipulation of settlement entered into between
respondent and Gerald, respondent allowed Gerald a deduction of
$40,000 attributable to Masada Press, Ltd., for the taxable year
1978 and a deduction of $35,617 attributable to Power Control for
the taxable year 1979. Respondent argues that where a deduction
was allowed in a settlement, it necessarily follows that there is
some basis in fact or law for that deduction.
Respondent's agreement to a compromise settlement may
suggest that the deductions claimed on a return were less than
grossly erroneous. See, e.g., Crowley v. Commissioner, T.C.
Memo. 1993-503; Anthony v. Commissioner, T.C. Memo. 1992-133;
Neary v. Commissioner, T.C. Memo. 1985-261. However, parties
consider a myriad of factors during settlement negotiations, and
we attach little weight to the stipulation of settlement in this
case. The naked stipulation of settlement gives no insight into
which factors influenced respondent's settlement position. The
settlement allowed deductions to Gerald for his out-of-pocket
expenses in 1978, and presumably for his out-of-pocket expenses
in 1979, and no deduction in 1980. The out-of-pocket expense
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