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deficiencies, additions to tax, and accuracy-related penalty set
forth above.
Prior to and during trial in this case, petitioners'
representatives submitted to respondent on behalf of petitioners
a number of "proposed revised" Federal income tax returns for
each of the years in issue that attempt to correct or clarify
some of the classification errors that occurred on petitioners'
original income tax returns. Respondent argues that petitioners'
proposed revised income tax returns are confusing and
inconsistent, and perpetuate many of the errors made in
petitioners’ original income tax returns, that petitioners’
proposed revised income tax returns should be ignored, and that
petitioners' original income tax returns should be the focus of
our analysis.
We disagree with respondent, in significant part, on this
point. In the many instances where petitioners' proposed revised
Federal income tax returns reflect additional items of income or
reductions in amounts claimed as expenses on petitioners'
original Federal income tax returns and/or the reclassification
of expenses consistent with classifications made by respondent in
respondent's notice of deficiency, petitioners' proposed revised
Federal income tax returns, with regard to such items, are to be
treated as concessions by petitioners.
Where petitioners' proposed revised returns reflect
reductions in petitioners' alleged income or increases in claimed
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