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Legal and Professional Expenses
Respondent disallowed a deduction for a legal fee expense
and a tax preparation fee expense for 1996. After consideration
of information sent in by petitioners on September 2, 1999,
respondent conceded most of the adjustment.
Utilities Expenses
On Schedules C of their 1995 return, petitioners claimed
$547 as an expense for utilities at the Vallecito property.
Because respondent had evidence that petitioners had resided at
the Vallecito property, he took the position that the utilities
expense was a nondeductible personal living expense. Petitioners
had submitted statements from individuals indicating that
petitioners did not reside at the property. As late as
November 17, 1999, Appeals requested additional information
concerning the occupation of the Vallecito property. For
settlement purposes, respondent conceded his position although
the evidence remained ambiguous. See Creske v. Commissioner,
T.C. Memo. 1990-318, affd. 946 F.2d 43 (7th Cir. 1991).
It was reasonable for respondent to make adjustments for
items and to refuse to concede the adjustments until he had
received and verified petitioners' substantiation for the amounts
adjusted. See Beecroft v. Commissioner, T.C. Memo. 1997-23;
Simpson Fin. Servs., Inc. v. Commissioner, T.C. Memo. 1996-317;
McDaniel v. Commissioner, T.C. Memo. 1993-148.
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