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respondent’s decision proposed the following deficiency and
additions to tax:
Sec. Sec.
Year Deficiency Sec. 6651(a)6653(a)(1)(A)6653(a)(1)(B) Sec. 6654
1986 $3,096 $774 $154.80 $3,096 $149.78
Respondent sent each petitioner a letter dated July 5, 2002,
enclosing the proposed decision document with supporting
computations. Petitioners refused to sign the decision document
for a variety of reasons. First, petitioners claim that the
decision document does not conform with the terms of the
stipulation of settled issues. Second, they claim that they were
denied an opportunity to consult with an attorney prior to
signing the stipulation of settled issues. Third, they claim
that respondent’s counsel misled them into believing the
stipulation they signed was not final and could be subject to
revisions.
In particular, petitioners wanted to revise the signed
stipulation, with respect to the 1986 taxable year, to show a
Schedule A mortgage interest deduction of $29,305 instead of the
listed amount of $5,218 and to include Schedule E rental income
of only $127,752 instead of the $172,752 amount listed on their
1986 Federal income tax return. Petitioners were aware that the
Schedule A mortgage interest deductions were in issue prior to
their signing the stipulation of settled issues. Petitioners
claim that respondent’s counsel agreed to allow further interest
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