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affd. 64 F.3d 1406 (9th Cir. 1995). The regulations authorize
two types of disclosure under section 6662(b)(2): (1) Disclosure
in attachments to the return, see sec. 1.6662- 4(f)(1), Income
Tax Regs., and (2) disclosure on the return, see sec. 1.6662-
4(f)(2), Income Tax Regs. Petitioners did not file any separate
disclosure statement; therefore, they must demonstrate that they
adequately disclosed all relevant information on their tax
returns.
Petitioners assert that they adequately disclosed the items
at issue on their 1991 and 1992 returns. The return for each
year contained two Schedules C for businesses for which
petitioner was identified as the sole proprietor, one for
"William J. Fleischaker, M.D." for which the principal business
was the provision of medical services and another for "Deborah
Fleischaker, et al." for which the principal business was oil and
gas production. On the Schedules C for petitioner's oil and gas
production for 1991 and 1992, petitioner claimed legal and
professional expenses of $439,871 for 1991 and $51,950 for 1992.
None of the claimed legal and professional expenses were related
to petitioner’s oil and gas production activity. Except for
$11,149 of the fees claimed in 1992, the fees claimed as legal
and professional fees from oil and gas production were for
payments made by petitioner under his guaranty obligations for
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