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presented no argument regarding the penalty. We
deem petitioner to have conceded the application
of the penalty.
II. Docket No. 3284-96, Cordes Finance Corporation:
A. 1992:
1. Respondent adjusted petitioner’s income for 1992
to reflect additional gross receipts of
$1,174,666.
a. Petitioner concedes this adjustment, to the
extent of $311,928.
b. Respondent concedes this adjustment, to the
extent of $20,000.
c. The remaining $842,738 at issue reflects
gross receipts that respondent determined
were income to petitioner for 1992 because
respondent determined petitioner used an
incorrect method of accounting for its 1992
taxable year and readjusted petitioner’s
income to reflect income accrued under the
accrual method of accounting. The parties
stipulated that the final decision in
Cordes Fin. Corp. v. Commissioner, supra,
would decide the proper amount of
petitioner’s gross receipts for 1992. In
accordance with the parties’ stipulations,
respondent concedes this adjustment.
2. Respondent readjusted petitioner’s reported bad
debt deduction for 1992 by $537,599 to reflect
substantiated bad debts for the taxable year.
Respondent concedes this adjustment.
3. Respondent disallowed $112,756 of petitioner’s
reported interest expense deduction for 1992 to
reflect substantiated interest expenses for the
taxable year. Petitioner concedes that
adjustment, to the extent of $73,298.
a. As a mathematical computation, petitioner’s
concession leaves $39,458 of the interest
expense at issue for 1992. The parties
stipulated, however, that $52,870 is
properly at issue.
b. Respondent concedes that portion of the
$52,870 paid which constitutes a safe-haven
rate of interest calculated, pursuant to
sec. 482 and the regulations thereunder, on
the underlying loans, to the extent that
portion exceeds the amount paid on those
underlying loans already allowed as an
interest expense on the underlying loans
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