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1996 taxable year. A Schedule K-1 was attached to Quality’s 1996
return. The Schedule K-1 listed petitioner as a general partner
of Quality with a 50-percent interest in profit sharing, loss
sharing, and ownership of capital. The Schedule K-1 listed
petitioner’s distributive share of Quality’s ordinary income,
interest income, and section 1231 gain for the 1996 taxable year
as $40,697, $1,411, and $311, respectively. The Schedule K-1
also listed petitioner’s distributive share of Quality’s section
179 expense deduction and other deductions as $644 and $800,
respectively.
During the course of trial preparation, respondent
discovered that petitioner had additional income from Quality.
In the amendment to answer, respondent asserted that petitioner
had the following additional amounts of unreported gross income
in 1996 with respect to his partnership interest in Quality: (1)
Ordinary income in the amount of $40,697; (2) section 1231 gain
in the amount of $311; and (3) interest income in the amount of
$1,411. With respect to petitioner’s partnership interest in
Quality, respondent allowed petitioner a section 179 expense
deduction and other deductions in the amounts of $644 and $800,
respectively. Respondent also increased petitioner’s self-
employment tax and allowed a corresponding deduction. Petitioner
has not specifically contested the applicability of the
employment tax and related deductions, and we deem that he has
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