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receipts and implausible testimony. We must inventory his claims
and shelve those that are unsupported.1
Background
During 1999, Otu Obot owned a small grocery store, and a
house in a marginal Buffalo neighborhood that he rented out. All
the contested deductions flow from this grocery store and that
rental property. His wife Carol was a senior corrections
counselor working for New York State, and she neither testified
nor was involved in the case in any way except for signing the
return and petition. The case was tried in Buffalo, and both
Obots were New York residents when they filed their petition.
The Obots itemized deductions on their 1999 return, using
Schedule A. They also reported losses from both the grocery
store and the rental property on Schedules C and E. The IRS
audited their return and disallowed many of their deductions:
Taken Allowed Disputed2
Schedule A $17,567 $10,174 $ 7,393
Schedule C 17,096 3,023 14,073
Schedule E 11,025 2,319 8,706
Total 45,688 15,516 30,172
1 Section references are to the Internal Revenue Code in
effect during 1999, and Rule references are to the Tax Court
Rules of Practice and Procedure.
2 The amount shown as disputed from Schedule A includes
$2,174 in computational errors that are not at issue in this
case.
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Last modified: May 25, 2011