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1. Whether petitioners may deduct the amount of repairs
expenses they incurred in 1994 ($114,823), as petitioners
contend, or the amount they paid ($51,203), as respondent
contends. We hold that petitioners may deduct only the amount of
repairs expenses that they paid in 1994.
2. Whether petitioners are liable for the accuracy-related
penalty for negligence under section 6662(a) for 1994. We hold
that they are.
References to petitioner are to Howard G. Grider. Section
references are to the Internal Revenue Code in effect during the
year at issue. Rule references are to the Tax Court Rules of
Practice and Procedure.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
Petitioners lived in Warren, Arkansas, when they filed their
petition.
A. Petitioner’s Logging Business
Petitioner has been in the logging business since 1951.
From 1951 to 1994, petitioner reported income from his logging
business on the cash method of accounting (i.e., he did not
1(...continued)
gross receipts, interest expense, and cost of goods sold are
correct. The parties settled the depreciation issue, and agree
that computational adjustments will be required for petitioners'
self-employment tax for 1994.
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