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for 1989, 1990, and 1991; and (3) whether petitioners are liable
for the addition to tax under section 6651(a)(1) for the 4 years
at issue.2
Some of the facts were stipulated. Those facts, with the
annexed exhibits, are so found and are incorporated herein by
reference. At the time the petition was filed, petitioners,
husband and wife, were residents of Oxon Hill, Maryland.
Petitioner is a schoolteacher. During the years at issue,
petitioner was also engaged in a trade or business activity that
she described as a beauty consultant. Essentially, the activity
she was engaged in was that of a representative for the Mary Kay
2
Respondent issued three notices of deficiency for the 4
years at issue. After the notices of deficiency were issued,
petitioner met with an Appeals officer for respondent, and, as a
result, respondent either conceded or made additional allowances
on several of the adjustments in the notices of deficiency. At
trial, the parties advised the Court that these adjustments were
considered settled, with respondent conceding the allowances of
the Appeals officer and petitioner conceding those adjustments
that had not been totally allowed by the Appeals officer (except
as to the three remaining issues described above). The parties
did not submit to the Court a listing of the various adjustments.
Counsel for respondent referred to some of these adjustments
during the trial, but the settled issues were not formalized in a
written agreement nor made part of the stipulation. In addition
to these concessions, respondent, at trial, conceded petitioners'
entitlement to a rental expense deduction for roof repairs for
the year 1991 in the amount of $3,480. This item had not been
claimed on petitioners' 1991 income tax return, nor was it
brought up by petitioners in the audit process. The item was
brought up by petitioner with the Appeals officer, who
acknowledged the expenditure but treated it as a capital
expenditure and allowed a $100 depreciation deduction for 1991.
The effect of respondent's concession at trial is to allow the
entire amount of $3,480 as a deduction for 1991 and elimination
of the $100 depreciation deduction allowed by the Appeals
officer.
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