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the unreported rental and sale payments is $13,233, or
$834 less than the amount determined in the notice of
deficiency, $14,067. Respondent acknowledges that the
notice of deficiency should be sustained to the extent of
the lesser amount, $13,233. Accordingly, we find that
petitioners’ gross income should be increased by unreported
rental payments of $2,400 and by unreported proceeds from
the sale of the newsstand on Knox Street of $10,833.
We turn to the principal issue in this case, the
expenses petitioners are entitled to deduct in connection
with their newsstand business. At trial, petitioners did
not attempt to substantiate the expenses claimed on the
Schedule C, Profit or Loss From Business, filed as part of
their original return. In fact, petitioner admitted that
his original return was not correct. Petitioner testified
that his original return was “done by mistakes” and “was
unintentionally done by me.”
At trial, petitioners proceeded by attempting to
substantiate the expenses claimed as deductions on the
Schedule C attached to their amended return. Petitioners
claimed different expenses on their original return, on
their amended return, and in their posttrial brief. The
following is a list of the expenses claimed by petitioners
and the expenses conceded by respondent to be deductible:
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Last modified: May 25, 2011