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D. Interest Income
Under section 61, interest income is includable in income.
See sec. 61(a)(4). Respondent determined that during 1987, 1988,
1989, and 1990, petitioner received interest income in amounts
that exceeded what was reflected on his tax returns. Petitioner
admitted that he did not reflect interest income received from
Faust Daniels for the 1988 and 1989 tax years. Petitioner,
however, alleged that some of the interest income that he failed
to reflect was actually included in the gross receipts of his law
practice. Petitioner further alleged that his secretary
inadvertently included the entire payment--principal and
interest--as taxable income, and therefore his income was
overstated.
As an initial matter, we note that petitioner has failed to
present any evidence that interest income was actually reported
on Schedule C. If, however, interest income was reported on
Schedule C, a separate adjustment for interest income could
result in petitioner’s being taxed twice on the same income.
Respondent’s method of computing petitioner’s correct Schedule C
income, however, eliminated the possibility of such duplication
by subtracting interest income from the computation of law
practice income. We further note that the only evidence that
both principal and interest were included in taxable income is
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