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in the case was the substantiation of the claimed expenses, the
case was referred back to the Examination Office in Jacksonville,
Florida; petitioners then met with one of respondent's auditing
agents. Petitioners presented to respondent's auditing agent
various documentation to substantiate some of their claimed
Schedule C and E deductions.
By notice dated December 22, 1995, the Court informed the
parties that the case was set for trial at the Trial Session of
the Court in Jacksonville, Florida, beginning on March 11, 1996.
In a letter to petitioners dated January 26, 1996,
respondent's District Counsel informed petitioners, in part:
From a review of the file, it appears that your
case was forwarded to the Jacksonville District to
review the documentation that you supplied to support
various deductions taken on you [sic] 1992 tax return.
It appears that the examiner made the following
adjustments to the proposed amounts listed on the
notice of deficiency: 1) the tax on premature IRA
distribution was increased to $6,268.00 based upon the
10% excise tax penalty on premature IRA distribution,
2) the Schedule C auto expenses were reduced by �
because you did not verify the business use of your
vehicle, 3) the Schedule C travel amounts were
disallowed in their entirety as you did not keep
adequate records and documentary evidence for business
travel away from home, 4) the Schedule C Meals and
Entertainment expenses were disallowed as you did not
provide records which establish the amount of each
expenditure, the date the entertainment took place,
location of entertainment; business purpose of
entertainment; and business relationship to the person
entertained; 5) the Schedule E expenses of $9,250.00
were allowed in accordance with the verification you
provided. Additionally, we have determined that you
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