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barred by the 3-year period of limitations provided by section
6501(a).
III. 1987 Deficiency and 1985 Deficiency Attributable
to the 1988 NOL Carryback
The deficiency for 1985 attributable to the 1988 NOL
carryback consists of, in part, "consulting fees" paid to Charles
Davis and legal expenses for tax matters, the Squirrel Bend
litigation, the SEC litigation, the Orange Co. litigation, and
general business matters.
The deficiency for 1987 consists of "consulting fees" paid
to Charles Davis, a $24,000 travel expense, and legal expenses
for tax matters, the Squirrel Bend litigation, the SEC
litigation, the Orange Co. litigation, the Hong Kong venture, and
general business matters.
Petitioner presented no evidence at trial regarding the
travel expense, and petitioner did not address this issue, or the
consulting fees paid to his son, on brief. Therefore, we find
that petitioner abandoned these issues. See Petzoldt v.
Commissioner, 92 T.C. 661, 683 (1989).
A. Deductibility of Legal Expenses
Deductions are a matter of legislative grace, and petitioner
bears the burden of proving that he is entitled to the deductions
claimed. See Rule 142(a); INDOPCO, Inc. v. Commissioner, 503
U.S. 79, 84 (1992). Section 162 allows a deduction for ordinary
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