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Unless otherwise indicated, all section references are to the
Internal Revenue Code in effect for the years in issue, and all
Rule references are to the Tax Court Rules of Practice and
Procedure. After concessions, the issues are whether petitioner
is: (1) Entitled to certain sole proprietorship expense
deductions; (2) entitled to employee business expense deductions;
(3) liable for section 6651(a)(1) addition to tax; and (4) liable
for section 6662(a) accuracy-related penalties.
FINDINGS OF FACT
When the petition was filed, petitioner resided in Orlando,
Florida. During the years in issue, he was an investment broker
and was married to Norma Blodgett.
I. Background
In December 1991, petitioner agreed to operate a branch
office of Quantum Financial Services, Inc. (Quantum). In the
middle of 1992, Quantum terminated the agreement. In 1994,
petitioner made a claim against Quantum in an arbitration hearing
before the National Futures Association. In the arbitration,
petitioner’s counsel was Thomas Kolter.
After the termination by Quantum, petitioner operated a sole
proprietorship called Equator Capital Management (Equator). From
mid-1994 through 1996, he was an employee of Daiwa Securities,
Inc. (Daiwa). During the years in issue, petitioner paid and
documented business expenses.
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