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Respondent determined deficiencies of $7,064, $8,723, and
$8,390 in petitioners' Federal income taxes, respectively, for
1997, 1998 and 1999, additions to tax under section 6651(a)(1) of
$364 and $963, respectively, for 1998 and 1999, and penalties
under section 6662(a) in the amounts of $1,413, $1,745, and
$1,678, respectively, for the 3 years at issue. At trial, the
parties filed written stipulations that provided for settlement
of all issues except the additions to tax under section
6651(a)(1) and the penalties under section 6662(a).2
2 The adjustments in the notice of deficiency included
the disallowance of all the charitable contribution and other
miscellaneous expense deductions petitioners had claimed on
Schedule A, Itemized Deductions, for each of the years at issue.
As a result of these adjustments, the remaining claimed itemized
deductions for each year were less than the standard deduction
allowed under sec. 63(c); consequently, petitioners were allowed
the standard deduction in the notice of deficiency. In the
stipulations filed at trial, the parties agreed to petitioners'
entitlement to some charitable contribution and other
miscellaneous deductions for each of the years in question, thus
entitling petitioners to itemize their deductions in lieu of the
standard deduction. In the notice of deficiency, respondent
determined that petitioners failed to include $1,405 in capital
gains on their 1998 return. The parties agree that petitioners
realized capital gain income of $1,405 for 1998. Since
petitioners' return for 1998 did in fact include capital gain
income of $1,409, it appears that petitioners overreported this
income by the amount of $4. Respondent also determined in the
notice of deficiency that petitioners failed to report $437 in
dividend income on their 1999 return. In the stipulation,
petitioners agree to this adjustment. Finally, several items of
expenses claimed by petitioners on a rental real estate activity
for the 3 years in question were disallowed in the notice of
deficiency. In the stipulation, the parties agreed to the
amounts petitioners were entitled to as deductions for the 3
years at issue.
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