Kenneth Andrew Baratelle - Page 2




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          1994.  Petitioner filed a petition seeking a redetermination of             
          the deficiency and contesting his liability for the penalty.                
               Following concessions,2 the issues for decision are:                   
               (1) Whether petitioner may deduct Schedule C, Profit or Loss           
          From Business, expenses in excess of those conceded by                      
          respondent; and                                                             
               (2) whether petitioner is liable for the accuracy-related              
          penalty.                                                                    
               Background                                                             
               Prior to trial, the parties filed a “stipulation of facts”,            
          which did little more than outline the factual disputes remaining           
          for trial and provide to the Court various written summaries of             
          petitioner’s litigating positions, and a supplemental stipulation           
          of facts.  To the extent that the stipulations reflect agreement            
          regarding material facts, those facts are summarized below and              
          are found accordingly.                                                      
               Petitioner resided in Henderson, Nevada, at the time he                
          filed his petition in this case.                                            
               In March 1994, petitioner’s employer, Mattel, terminated               
          petitioner’s employment.  At that time, petitioner, who had more            
          than 20 years of manufacturing experience in the toy industry,              


               2Respondent also proposed adjustments for a State tax refund           
          that petitioner allegedly received and to petitioner’s exemptions           
          and itemized deductions.  The parties agree that petitioner is              
          not required to include any State tax refund in income and that             
          the remaining adjustments are computational.                                




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