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account at the time the withdrawal was made, and that petitioners
did not employ a consistent interest rate in their calculations.
We agree with respondent and conclude that petitioners have not
shown that Mr. Jacobsen’s distribution qualifies for an exception
to the tax imposed under section 72(t).
Conclusion
Petitioners appear to have had a difficult year in 1997.
However, throughout the proceedings in this case, Mr. Jacobsen
made unwarranted accusations against respondent’s representatives
and complained that respondent’s agents never explained exactly
what would be required to substantiate petitioners’ expenses.
Mr. Jacobsen acknowledged that, in an earlier case in this Court,
docket No. 18060-93, involving petitioners’ liability for 1991,
business expenses were disallowed in a bench opinion and that an
appeal to the Court of Appeals for the Ninth Circuit was
unsuccessful. See Jacobsen v. Commissioner, 103 F.3d 138 (9th
Cir. 1996), affg. an Oral Opinion of this Court. Thus, by the
time their return was filed for 1997, petitioners were on notice
that they needed to substantiate better the deductions claimed on
their returns. Our sympathy toward their personal situation does
not mean that we can allow deductions that have not been
substantiated in accordance with the legal requirements.
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Last modified: May 25, 2011