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concedes that it is not allowable as a deduction in 1990.
Petitioner admitted that this interest was paid by him in 1989
and offered by way of explanation that he did not have his bank
statement available in time to claim the amount on his 1989
return, and so he claimed it on his 1990 return. We find this
constitutes "disregard of rules or regulations" within the
meaning of section 6662(b)(1).
With respect to "Other" interest of $10,210, the parties
have stipulated that petitioner is not entitled to any deduction
on Schedule C for "Other" interest but instead is entitled to a
mortgage interest deduction of $7,730 on Schedule A of his 1990
return. Petitioner has offered no explanation for the $2,480 in
claimed interest to which he now concedes he is not entitled. In
the absence of any substantiation for this amount, we find that
the underpayment arising from its disallowance is attributable to
negligence. Sec. 1.6662-3(b)(1), Income Tax Regs.
1990 Legal Expenses
Petitioner claimed $10,556 in legal expenses in Schedule C
of his 1990 return to which the parties now stipulate he was not
entitled. The amount represents legal fees petitioner paid in
connection with the purchase of a house in Florida as part of his
efforts to commence a homebuilding business. Petitioner now
concedes that the amounts should have been capitalized and added
to the basis of the house. Petitioner did not seek any
professional advice with respect to taking the deduction. We
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