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Respondent determined deficiencies of $13,755 and $16,705 in
Federal income taxes, respectively, for petitioners’ 1999 and
2000 tax years, section 6662(a) penalties for the years 1999 and
2000 of $2,751 and $3,341, respectively, and a section 6651(a)(1)
addition to tax of $922.70 for the year 2000.
After concessions at trial, noted hereafter, the issues for
decision are: (1) Whether petitioners are entitled to dependency
exemption deductions under section 151 for the years 1999 and
2000; (2) whether petitioners are entitled to itemized deductions
of $11,650 and $13,405 under section 170 for charitable
contributions for the years 1999 and 2000, respectively; (3)
whether petitioners are entitled to trade or business expense
deductions of $14,900 and $15,198 for the years 1999 and 2000,
respectively, for supplies; (4) whether petitioners are entitled
to trade or business expense deductions of $4,525 and $4,800 for
the years 1999 and 2000, respectively, for wages; (5) whether
petitioners are liable for section 6662(a) penalties for the
years 1999 and 2000; and (6) whether petitioners are liable for a
section 6651 addition to tax for the year 2000.2
2Generally, the burden of proof is on the taxpayer. Rule
142(a)(1). The burden of proof may shift to the Commissioner
under sec. 7491(a) if the taxpayer establishes compliance with
the requirements of sec. 7491(a)(2)(A) and (B) by substantiating
items, maintaining required records, and fully cooperating with
the Secretary’s reasonable requests. Prior to trial, petitioners
did not cooperate with respondent in producing books and records
to substantiate their expenses. The concessions by respondent
(continued...)
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