Don C. and Judy Montgomery - Page 19

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                  Date         Check No.        Amount         Payee                  
                 04/06/89         1808          $395       1st Interstate             
                 04/17/89         1816          1,702      1st Interstate             
                                                                                     
                  Total                        2,097                                 


                  Neither of these checks bears any notation, and the                 
             peg                                                                      
             board ledger sheet on which these checks should appear was               
             not introduced into evidence.                                            


                                       OPINION                                        
                  At the outset, we note that respondent concedes part                
             or all of four of the adjustments determined in the notice               
             of deficiency.  First, with respect to the adjustment                    
             increasing petitioners' income on the ground that                        
             petitioner realized unreported income from H&B of $81,865                
             in 1988 and $36,762 in 1989, respondent concedes $5,700 of               
             the unreported income in 1988 and $5,500 in 1989.  Second,               
             respondent concedes the full amount of the adjustment                    
             charging petitioner with unreported rental income of $1,853              
             in 1989, and $979 in 1990.  Third, respondent concedes, as               
             incorrect, the adjustment disallowing petitioners' capital               
             loss deductions of $3,000 per year in 1988 and 1989, and                 
             $3,146 in 1990.  Finally, respondent concedes the additions              
             to tax and penalties attributable to each of these conceded              





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