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For instance, as discussed above, respondent argues that for
Excellence’s FYE 1996, petitioners are required to recognize as
ordinary income from Schedule K-1 both business income and
interest income. However, respondent then includes only the
business income in computing basis in Excellence. In fact,
respondent in the proffered basis calculations generally
disregards interest income reported on Schedules K-1 and/or
petitioners’ returns, for no apparent reason. Additionally,
respondent seems in certain instances to ignore even business
income from the S corporations. As one example, in arriving at
basis in Target, respondent takes into account the business
income or loss for FYE 1989 through 1995, with the exception of
FYE 1994. Yet $245,886 of business income was reported both on
Target’s Schedule K-1 and on petitioners’ Form 1040 for 1994.
Similarly, in figuring basis in Alofs, respondent incorporates
business income from FYE 1995 but ignores the $401,192 from Alofs
reported by petitioners on their 1994 Form 1040. The absence of
any explanation for these omissions does little to inspire
confidence in respondent’s position.
In contrast to the silence just described, most of the basis
items claimed by petitioners were addressed in some fashion by
the parties at trial or on brief. The difficulty here is that
much of what was said is largely incoherent or irrevelvant,
leaving out what would seem to the Court to be basic, pertinent
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