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$39,193 of the $43,735 in deductions claimed on Schedule C for
that year. The amounts that respondent did not disallow were
allowed as Schedule A, Itemized Deductions.
On the 1999 return, petitioners reported capital gain income
of $8,853; however, no Schedule D, Capital Gains and Losses,
accompanied the return. Respondent determined that petitioners
realized $30,270 in capital gains; however, at trial, the parties
settled this issue with petitioners’ conceding capital gains of
$21,417 for 1999.
For the 2 years at issue, petitioners claimed Schedule A
deductions of $28,331 for 1999 and $36,950 for 2000. Respondent
disallowed $9,253 and $13,435 of these deductions, respectively,
for 1999 and 2000. Some of the adjustments were computational,
based on other adjustments, and others were disallowed for lack
of substantiation. Still other adjustments, as noted earlier,
included allowance of some of the amounts disallowed as Schedule
C deductions. Finally, miscellaneous itemized deductions of
$16,310 on the 2000 return were reduced to $12,581 for lack of
substantiation.
On Schedule C for petitioners’ 1999 and 2000 tax years,
respondent determined that a considerable portion of the claimed
5(...continued)
of $8,853. In the notice of deficiency, respondent determined
the capital gains income was $30,270. At trial, the parties
settled that issue for the amount of $21,417.
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