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petitioner prepared for the deposits and disbursements from his
personal bank accounts. Petitioner’s spreadsheets classified the
various disbursements as expenditures for automobiles, dues and
subscriptions, office, telephone, utilities, interest,
maintenance and repair, travel and entertainment, licenses and
taxes, commissions paid, insurance, and miscellaneous. Those
disbursements were then claimed on the Schedules C as deductions
from the gross income he reported for his real estate business.
Respondent reconstructed petitioner’s expenses from buying and
selling real estate for 1985 through 1988. See appendix A. In
reconstructing petitioner’s expenses, respondent disallowed many
of the deductions petitioner claimed for a failure to
substantiate or a failure to show an ordinary and necessary
business expense for purposes of section 162. Respondent allowed
deductions for petitioner’s real estate business in much larger
amounts than petitioner originally claimed on his returns.65
OPINION
Petitioner did not present any evidence that respondent
erred in reconstructing his Schedules C real estate expenses.
Petitioner does not present any arguments on brief relating to
his Schedules C real estate expenses or respondent’s
65Of course, it is likely that many of these expenses were
related to properties that petitioner sold but failed to report.
We point out that the largest items of additional expense
deductions are interest and taxes which appear to be linked to
properties which petitioner sold as part of his real estate
business.
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