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executed the documents. The revenue agent sent petitioners a
corrected Form 4549A, which petitioners refused to sign.
Respondent mailed a deficiency notice to petitioners on June
18, 2004, in which respondent computed the deficiency amounts
from the original returns petitioners filed for the years at
issue. Petitioners timely filed a petition with this Court
contesting respondent’s disallowance of the lemon farming
expenses for 1999 and 20024 and asserting that petitioners were
entitled to additional deductions for lemon farming expenses in
2000 and 2001.5 Petitioners are also contesting the treatment of
the interest and capital gains and the imposition of the
accuracy-related penalty.
4It appears from the record that a portion of the losses
from the lemon farming activity was reported on petitioners’
individual returns for 1999 and a portion of the losses were
reported on a trust return for that year.
5Respondent disallowed the lemon farming expenses for 1999
and 2002 in the deficiency notice, but the lemon farming expenses
for 2000 and 2001 were not reported on petitioners’ original
returns. Respondent did not disallow the lemon farming expenses
for 2000 and 2001 in the deficiency notice because respondent
computed the deficiencies from the original returns petitioners
filed. Petitioners deducted the lemon farming expenses on a
trust return for 2000, and we assume petitioners also deducted
them on a trust return for 2001, although the record is not
clear. Petitioners assert in their petition that they are
entitled to additional deductions for 2000 and 2001 for their
lemon farming activity that were unreported on their original
returns. Petitioners’ assertion in their petition is consistent
with petitioners’ position on their pro forma returns, which do
include deductions for lemon farming expenses for all years.
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