J. Thomas and Henrietta A. Hardin - Page 5

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          (5) he needed to attend a closing, (6) he needed to attend a                
          closing for a friend, (7) he needed to attend a closing for his             
          law firm, (8) the weather was too bad, (9) he was working on a              
          political campaign, (10) he had to be in court, (11) he was too             
          busy with his law practice, and (12) he was stung by a wasp.                
          Because of petitioner’s excuses to reschedule the substantiation            
          conferences, this matter languished for more than 2 years in                
          Exams.                                                                      
               After 2-1/2 years of futile attempts at rescheduling                   
          substantiation conferences with petitioners, respondent issued a            
          statutory notice of deficiency (Notice) on September 6, 2001.  In           
          the Notice, respondent disallowed $67,906 claimed by petitioners            
          on Schedule C-15 as ordinary and necessary expenses incurred in             
          operating petitioner’s law practice, $22,828 claimed by                     
          petitioners on Schedule C-26 as ordinary and necessary expenses             
          incurred in serving as a divorce referee, and $7,541 claimed in             
          Schedule E rental losses.7  Respondent also assessed an accuracy-           


               5 Regarding petitioner’s law practice, petitioner failed to            
          provide documentation to substantiate car expenses, utilities,              
          phone, travel expenses, taxes and licenses, contract labor, dues            
          and publications, office expenses, legal and professional                   
          services, insurance, and filing fees.                                       
               6 Regarding petitioner’s divorce referee services,                     
          petitioner failed to substantiate car expenses, contract labor,             
          insurance, interest, office expenses, and travel expenses.                  
               7 Respondent also increased petitioners’ Schedule C gross              
          receipts by $88,587.  Respondent subsequently conceded, however,            
                                                             (continued...)           




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