James J. and Sandra A. Gales - Page 17


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          III.  Conclusion                                                             
               Respondent’s adjustment disallowing the deductions of the               
          1992 and 1993 reported loan amounts was in error.  Respondent’s              
          determinations of deficiencies are not sustained to the extent               
          allocable to those adjustments.                                              

                                                   Decision will be entered            
                                              under Rule 155.                          





































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