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amounts of $3,790 and $2,903, respectively. After concessions,
the sole issue for decision is whether petitioners are entitled
to an interest deduction for interest they paid to the Internal
Revenue Service (the Service) during 1991 on tax deficiencies for
earlier years.3
Background
This case was submitted fully stipulated pursuant to Rule
122. The stipulation of facts and the attached exhibits are
incorporated herein by this reference, and the facts contained
therein are found accordingly. At the time the petition was
filed, petitioners resided in Thornton, Colorado.
During the year in issue, Fred Michael (petitioner) was
unemployed. Petitioner Yvonne Michael's principal business was
running Four Sisters, an Indian art retail store.
1(...continued)
Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
2Petitioners concede that they are liable for an addition to
tax under sec. 6651(a)(1) equal to 25 percent of any deficiency
determined herein.
3On their 1991 joint Federal income tax return, petitioners
deducted $21,286.76 on Schedule A as legal fees. Respondent
concedes that $7,211 is an allowable deduction for legal fees
under sec. 212 but is subject to the 2 percent of adjusted gross
income limitation on Schedule A. Petitioners concede that the
remaining $14,075.76 claimed as legal fees is not an allowable
deduction. Respondent concedes that petitioners are not liable
for an accuracy-related penalty under the provisions of sec.
6662(a).
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