Lucian T. Baldwin, III - Page 40

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          ordinarily hold that petitioner has failed to prove that LFI paid           
          or incurred any expenses in excess of those allowed by                      
          respondent.  In this case, however, because the notices of                  
          deficiency take what appear to us to be inconsistent positions              
          with respect to LFI’s expenses20 and, in our view, appear to                
          acknowledge petitioner’s entitlement to a deduction for a portion           
          of LFI’s expenses under section 183(b) for 1991 and 1992, we                
          shall require respondent to make adjustments for 1989 and 1990              
          under section 183(b) comparable to those made for 1991 and 1992.            
               C.  The Parties’ Other Arguments                                       
               We decline to address the parties’ other arguments regarding           
          LFI as our holdings under sections 162 and 183 adequately dispose           
          of the LFI issues raised by the parties.                                    
          II. BAC Issues                                                              
               In the notices of deficiency, respondent recalculated BAC’s            
          taxable income by disallowing all of BAC’s expenses and making              
          certain adjustments to income, increased petitioner’s income by             
          his distributable share of BAC’s corrected S corporation income,            
          and allowed petitioner additional miscellaneous Schedule A                  
          deductions to the extent of petitioner’s distributable share of             
          BAC’s income for each of the years at issue.                                

               20For example, the notices of deficiency allege generally              
          that LFI’s losses and/or expenses were not substantiated but                
          allow petitioner an adjustment under sec. 183(b) for some of the            
          years at issue.                                                             

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