- 40 -
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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