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tax credit. Petitioners concede in the stipulation that they are
not entitled to a miscellaneous itemized deduction of $89.10
claimed on Schedule A. However, the $89.10 miscellaneous
itemized deduction was one of the computational errors that
resulted in the $9,481 of tax previously assessed pursuant to
section 6213(b)(1). The parties further stipulated that
petitioners made a total of $70,308.20 in Federal tax payments
for the year at issue.2
At trial, the parties orally stipulated that $32,029 of gain
from the sale of business real estate which was not included in
income on petitioners’ tax return is includable in income as a
capital gain. The testimony of Philip Skalka (petitioner)
corroborated this further stipulation. However, the parties
dispute at which capital gains tax rate the $32,029 capital gain
is to be taxed.
After the trial, respondent filed an answer seeking an
increased deficiency of $8,006, for a total deficiency of
$12,866. See sec. 6214(a). It is well established that the
Court has jurisdiction to review an increased deficiency asserted
by the Commissioner at or before the hearing or rehearing. Sec.
2 Respondent’s recalculation of petitioners’ tax liability
reflects that petitioners made only $69,829 in Federal tax
payments for 1997. In accordance with the holding in this
opinion, respondent shall apply the stipulated tax payment amount
of $70,308.20 when preparing the Rule 155 computation.
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