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amount of $11,104.67. The property for which the escrow deposit
was made was not identified in a way that was understandable to
the examining Internal Revenue agent ("PROPERTY ADDRESS: AP
#007-060-04").
Appeals later requested on November 17, 1999, identifying
information for the purchase and sale of the Vallecito property.
The identifying information must therefore have been received
sometime after that date, and after the October 26, 1999, filing
of respondent's answer in the case.
Capitalized Costs From 1994
During the examination of petitioners' 1994 Federal income
tax return, respondent disallowed Schedule C deductions for
automobile expenses, property taxes, and insurance. Petitioners
allege that there was an "informal agreement" to allow them to
capitalize a portion of the costs and to allow "deduction" of
them in 1996. The notice of deficiency for 1996 does not reflect
such an informal agreement.
There is but scant evidence in the record of an informal
agreement as alleged by petitioners. It is not apparent what the
terms of such an agreement may have been. And it was, by
petitioners' own description, an "informal" agreement. After
reviewing documents submitted by petitioners on November 11,
1999, Appeals agreed to allow petitioners to capitalize as part
of the cost of the Vallecito property a portion of the 1994
expenditures for automobile expenses and property taxes.
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