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After concessions, we must decide:
1. Whether petitioner Allie Ray McCullen had a trade or
business of developing and selling real estate in 1990 and 1991.
We hold that he did not.
2. Whether petitioners may deduct $23,067 for 1990 as
interest related to farming. We hold that they may. Respondent
contends that they may deduct $10,428 for 1990. Petitioners
deducted $20,102 in 1990, but, as discussed below, petitioners
paid more farm interest than they deducted.
3. Whether petitioners may deduct as interest related to a
trade or business the interest paid on a $100,000 loan from South
Carolina Bank that they used to buy stock in New-East Bank of
Goldsboro (New-East Bank). We hold that they may not.
4. Whether petitioners paid $8,126 in interest to First
Hanover Bank in 1990, as petitioners contend; $5,443, as
respondent contends; or some other amount. We hold that
petitioners paid $8,126 in interest to First Hanover Bank in
1990.
5. Whether petitioners are liable for the accuracy-related
penalty for negligence under section 6662(a) for 1990 and 1991.
We hold that they are.
Section references are to the Internal Revenue Code. Rule
references are to the Tax Court Rules of Practice and Procedure.
References to petitioner are to Allie Ray McCullen.
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