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accuracy-related penalties of $7,372, $17,842, and $14,291.1
Respondent also determined as to 1997 that petitioner was liable
for a $9,215 addition to tax under section 6651(a)(1).
Following concessions,2 we are left to decide:
1. Whether the 3-year period of limitations under section
6501(a) has run on 1997. We hold it has not.
2. Whether petitioner may deduct self-employment expenses
in amounts greater than those allowed by respondent. We hold he
may not.
3. Whether petitioner may deduct for 1998 a $37,181 net
operating loss (NOL) carryover. We hold he may not.
4. Whether petitioner may deduct dependency exemptions for
his daughter Keauna (Keauna) and his son Zik (Zik). We hold he
may not.
1 Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the subject years, Rule
references are to the Tax Court Rules of Practice and Procedure,
and dollar amounts are rounded.
2 In addition to the concessions made explicitly, we
consider petitioner to have conceded respondent’s determination
of unreported income by virtue of the fact that petitioner did
not address this issue on brief. We hold without further comment
that petitioner underreported the 1997 and 1998 gross income of
his sole proprietorship by $5,261 and $26,631, respectively, as
determined by respondent. See Levin v. Commissioner, 87 T.C.
698, 722-723 (1986), affd. 832 F.2d 403 (7th Cir. 1987);
Zimmerman v. Commissioner, 67 T.C. 94, 104 n.7 (1976); see also
Remuzzi v. Commissioner, T.C. Memo. 1988-8, affd. without
published opinion 867 F.2d 609 (4th Cir. 1989).
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