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On its fiscal 1990 tax return, petitioner claimed a $101,517
rent expenses deduction. In the notice of deficiency, respondent
disallowed $96,000 of this amount. At trial, respondent conceded
that petitioner is entitled to deduct rent expenses of $15,517.
All of the underpayment of tax for petitioner’s fiscal 1990
is attributable to petitioner’s negligence.
OPINION
I. Omitted Income
Petitioner argues that, although its records were
incomplete, it demonstrated through the documents provided and
through testimony that (1) petitioner sold 5,029,368 gallons of
diesel fuel during fiscal 1990 and (2) the retail price per
gallon of diesel fuel asserted by respondent is 30 cents higher
than the price actually charged by petitioner. In fact,
petitioner asserts, if appropriate adjustments were made to
respondent’s numbers, then they would show that petitioner
overstated income by “approximately $30,000.00” (opening brief)
or “23,571.00” (answering brief). Also, petitioner claims that
the reason its records were incomplete is that many of the
records were confiscated by the California Board of Equalization
and never returned to petitioner.
Respondent argues that (1) the testimony and documents
provided by petitioner are insufficient to establish that
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