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items were derived; he knew only that Mr. Hoyt or a member of his
organization had entered the items on the returns, and he assumed
the items were therefore correct. Mr. Van Scoten did not
question any of the amounts shown on the return, and petitioners
did not have the returns reviewed by an accountant or anyone else
outside the Hoyt organization prior to signing them.
Respondent issued a Notice of Final Partnership
Administrative Adjustment (FPAA) to petitioners with respect to
DSBS 87-C that reflected the disallowance of various deductions
claimed on the partnership return for its taxable year ending in
1991. Because a timely petition to this Court was not filed in
response to the FPAA issued for DSBS 87-C, respondent made a
computational adjustment assessment against petitioners with
respect to the FPAA. The computational adjustments changed
petitioners’ claimed DSBS 87-C loss of $45,510 to income of
$4,998, disallowed the partnership-related IRA contribution
deduction of $2,000, and made computational adjustments to
petitioners’ itemized deductions and self-employment tax
deduction based on the above two changes.4 These changes
increased petitioners’ tax liability to $16,479, an increase of
$14,681 above petitioners’ reported tax liability of $1,798. In
the notice of deficiency underlying this case, respondent
4The amount of the farm income reported by petitioners on
their 1991 return was not changed by respondent pursuant to the
computational adjustment assessment, presumably because the farm
income was not a partnership item.
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