Kenneth J. Barela - Page 13

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          fax, respondent faxed the following response to Mr. Koll:                   
               However, at no time did I agree, or express an opinion,                
               as to a particular year in which the expenditures at                   
               issue (which I consider to be capital) would be                        
               deductible, since this would be based upon facts and                   
               circumstances that I am not now aware of, or at least                  
               aware of in total.  I think that any such conclusion as                
               to the proper year is premature by any of us since not                 
               all of the Barela tax returns (including, in                           
               particular, the return for calendar year 1999) have yet                
               been filed, let alone reviewed by Eric or me.                          
               Respondent’s letter is consistent with respondent’s response           
          to petitioner’s proposal during the negotiations.  Upon receipt             
          of respondent’s letter neither Mr. Koll nor petitioner made any             
          attempt to respond, rebut, or dispute the contentions in                    
          respondent’s letter.  Further, petitioner did not move to                   
          withdraw or to vacate the entered decision for 1998.                        
               Accordingly, we hold that the parties did not reach a                  
          binding agreement as to the allowance of the $5,433 loss.                   
          Petitioner has not otherwise shown entitlement to said loss for             
          1999 and is not entitled to deduct the $5,433 amount on his 1999            
          return.                                                                     
               We have considered all other arguments advanced by the                 
          parties, and, to the extent that we have not addressed these                
          arguments, we consider them irrelevant, moot, or without merit.             

                                             Decision will be entered                 
                                        under Rule 155.                               








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