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deductible as ordinary and necessary business expenses. We hold
that the earned commissions were taxable as ordinary income, and
that the paid commissions are added to the basis of options
purchased and treated as an offset to the price of options sold.
(3) Whether petitioners were entitled to deduct certain
unreimbursed employee business expenses. We hold that the
deductions were properly disallowed.
(4) Whether petitioners are liable for additions to tax
under sections 6653(a) and 6661 and accuracy-related penalties
under section 6662(a), (b)(1) and (2). We hold that petitioners
are so liable.
(5) Whether petitioner Ruth Kelly (Mrs. Kelly) is entitled
to relief from liability as an innocent spouse. We hold that she
is not entitled to innocent spouse relief.4
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and attached exhibits are incorporated
herein by this reference. Petitioners filed joint Federal income
tax returns, as husband and wife, for each of the years at issue.
At the time the petitions were filed, they resided in Brentwood,
New York.
4On most issues petitioners have a conflict of interest.
Mrs. Kelly joined her husband only with respect to issue (2).
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