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Petitioner asserts he is entitled to additional trade or
business deductions on account of other expenses paid by
Universal, in an aggregate amount of approximately $29,500.
Petitioner refused to testify (or supply any other evidence)
about the business purpose of these expenses. The only proof
petitioner offered in support of his claim consists of copies of
various checks drawn on the Universal account.
Respondent objects to the admission of these checks because
petitioner did not exchange them with respondent 15 days prior to
trial, as required by our standing pretrial order. Respondent
also argues that petitioner has not proved his entitlement to any
additional deductions, whether or not the checks are admitted.
Before we can consider these issues, we need to address one
preliminary matter. We have redetermined the amount of
petitioner’s income under the assignment of income rule; we have
not found it necessary to decide whether Universal was a sham.
We also note that respondent has never argued that the income and
deductions in issue should be attributed to different taxpayers.
Respondent has stipulated that petitioner is entitled to
deductions for some amounts paid by Universal; these stipulations
were not conditioned on our deciding that Universal was a sham.
Accordingly, we conclude respondent has conceded that, because we
have decided petitioner’s income includes payments received by
Universal, petitioner may deduct amounts paid by Universal to the
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