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as capital gain for that year.
With respect to the net operating loss deductions claimed in
the 1994 and 1995 joint returns, on the record before us, we find
that petitioner has failed to show entitlement to those deduc-
tions. Accordingly, we sustain respondent’s determinations to
disallow those claimed deductions for the years at issue.
With respect to the respective Social Security benefits that
Ms. Treadaway and petitioner received during 1994 and 1995, none
of which was included in taxable income in the joint returns for
those years, on the record before us, we sustain respondent’s
determinations to include in taxable income for the years at
issue 85 percent of the respective Social Security benefits that
Ms. Treadaway and petitioner received during those years. See
sec. 86(a)(2)(B).
With respect to the accuracy-related penalty under section
6662(a) that respondent determined for each of the years at
issue, respondent concedes on brief that that penalty should not
be imposed on the portion of the underpayment for each of those
years that is attributable to the failure to include in taxable
income for each such year 85 percent of the respective Social
Security benefits that Ms. Treadaway and petitioner received
during each such year. In addition, we have held that petitioner
is entitled for 1995 to deduct from the income reported in
Schedule F of the 1995 joint return $10,101.37 of expenses that
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