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Practice and Procedure. After concessions1 by the parties, the
1 In the notice of deficiency, respondent determined that
certain advances made by subchapter S corporations Spencer Pest
Control of South Carolina, Inc. (SPC-SC), and Spencer Pest
Control of Florida, Inc. (SPC-FL), to petitioners were taxable
distributions. Respondent concedes that the advances were, in
fact, loans made by the corporations to petitioners.
Respondent further determined that petitioners were liable
for (1) additions to tax pursuant to sec. 6651 for failure to
file timely Federal income tax returns for taxable years ending
Dec. 31, 1991 and 1992, respectively, and (2) accuracy-related
penalties pursuant to sec. 6662 for negligence or disregard of
the rules or regulations. Petitioners concede the sec. 6651
additions to tax and respondent concedes the sec. 6662 accuracy-
related penalties.
Additionally, respondent determined that for the years in
issue certain computational adjustments should be made, with
respect to Bill L. and Patricia M. Spencer (collectively, the
Spencers), which would: (1) Increase their charitable
contribution deduction for taxable years 1990 and 1991; (2)
reduce their itemized deductions for taxable years 1991 and 1992;
(3) reduce their deduction for exemptions for taxable years 1991
and 1992; and (4) entitle them to utilize their investment tax
credit carryover from prior years for taxable year 1990. These
adjustments stem from other adjustments that had the effect of
increasing the Spencer's adjusted gross income (AGI). Respondent
agreed to accept, as filed, the miscellaneous deductions subject
to AGI claimed by the Spencers for taxable years 1991 and 1992.
The remaining adjustments are merely mathematical adjustments
that the parties can make in the Rule 155 computation that we
order below. Respondent further determined that the Spencers
were not entitled to deduct, as miscellaneous itemized
deductions, amounts that were incurred as legal expenses in
connection with their chapter 11 bankruptcy proceedings for
taxable years 1991 and 1992. Respondent now concedes that they
properly claimed, and were entitled to deduct, such legal
expenses for taxable years 1991 and 1992.
Similarly, as to Joseph T. and Sheryl S. Schroeder
(collectively, the Schroeders), respondent determined that for
the taxable years in issue certain computational adjustments
should be made which would: (1) Reduce allowable medical
deductions to zero, and (2) reduce the allowable child care
credit percentage to 20 percent. As stated previously, these
adjustments are merely mathematical adjustments that the parties
can make in the Rule 155 computation that we order below.
(continued...)
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