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made those determinations because petitioners did not establish
their entitlement to a casualty loss deduction for 1997.
Respondent also determined in the notice that petitioners
realized a long-term capital gain of $211,000 for 1995 from the
sale of the condo and that they understated the amount of such
gain in their 1995 joint return by $185,796. In determining that
petitioners realized $211,000 from the sale of the condo, respon-
dent determined that petitioners’ adjusted basis in the condo at
the time of its sale was zero.
Respondent further determined in the notice to disallow
rental expense deductions of $29,383 and $17,438 claimed in
Schedules E of the 1996 and 1997 joint returns, respectively.
Respondent made those determinations because petitioners did not
establish that the deductions claimed were for amounts (1) that
petitioners expended or (2) that petitioners expended for the
purpose(s) claimed.
Respondent also determined in the notice to disallow a
mortgage interest deduction of $21,846.03 in Schedule A of the
1996 joint return. Respondent made that determination because
petitioners did not establish that the deduction claimed was for
an amount (1) that petitioners expended or (2) that petitioners
expended for the purpose claimed.
Respondent further determined in the notice that petitioners
are liable for each of the years at issue for the accuracy-
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