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Following our consolidation of these cases for purposes of
trial, briefing, and opinion, and following our rulings granting
respondent's motions for partial summary adjudication, Scherping
v. Commissioner, T.C. Memo. 1991-384, and Scherping v.
Commissioner, T.C. Memo. 1991-388, we are left to decide the
following issues:
1. Whether LaVern Scherping and Loren Scherping may deduct
interest expenses in amounts greater than those determined by
respondent.
2. Whether LaVern Scherping and Loren Scherping are liable
for the additions to tax for negligence determined by respondent
under section 6653(a)(1) and (2) for 1984 and 1985 and under
section 6653(a)(1)(A) and (B) for 1986.
3. Whether LaVern Scherping and Loren Scherping are liable
for the additions to tax for substantial understatement
determined by respondent under section 6661.
We hold for respondent on all issues. Section references
are to the Internal Revenue Code in effect for the years in
issue. Rule references are to the Tax Court Rules of Practice
and Procedure. The term "petitioners" refers to LaVern Scherping
and Loren Scherping collectively.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulated facts and the exhibits submitted therewith are
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