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to respondent's agent during the audit of petitioner's
returns. On the other hand, petitioner's argument is
inconsistent with petitioner's reporting of its real
property sales using the installment method and, in
effect, representing that none of those sales involved
a "disposition of real property which is held by the
taxpayer for sale to customers in the ordinary course of
the taxpayer's trade or business." See sec. 453(l)(1)(B),
(b)(2)(A).
We also agree with respondent regarding the allocation
of petitioner's expenses. Respondent accepts petitioner's
position with respect to the allocation of legal and
accounting expenses, franchise taxes, and income taxes.
Accordingly, we need not discuss those expenses. In the
case of Mr. McKelvey's compensation, the payroll tax
attributable thereto, and the expense for the automobile
furnished to Mr. McKelvey, we agree with respondent that
petitioner's proposed allocation is not reasonable in light
of Mr. McKelvey's testimony regarding the small amount of
time he spent collecting note payments and the fact that
petitioner did not purchase or sell any real estate during
1992 or 1993. Similarly, petitioner has failed to
establish a factual basis to allocate its miscellaneous
expenses, its expenses for supplies, and its expenses for
utilities and telephone. This is particularly true in
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