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substantiate the deductions claimed in the return for
the year in issue, 2000. Again, this is a fantasy on
the part of Respondent’s counsel. For example, Exhibit
8-P, containing documentary support for itemized
deductions for the year in issue, is nearly one inch
thick.
The referenced exhibit is in fact Exhibit 7-P (Exhibit 8-R is a
5-page copy of respondent’s interrogatories to petitioners) and
consists of dozens of pages of photocopied tickets, receipts,
bills, and invoices, some of which are illegible, interspersed
with a few lists purporting to summarize totals by category.
None of the materials establish a connection between the expense
incurred and any particular business activity of petitioners.
As alluded to previously, respondent disallowed certain of
the expenses in their entirety while permitting a large
percentage to be claimed as miscellaneous deductions on Schedule
A. Petitioners’ failure to address individual expenditures
leaves their position at this juncture unclear. To the extent
that they continue to maintain that the expenses should be
allowed on Schedule C as attributed to a securities trading
and/or consulting business of Mr. Arberg, suffice it to say that
nothing in the record links any given outlay to a sole
proprietorship venture conducted by Mr. Arberg, much less
demonstrates any rational basis for allocating many of the
claimed items between the alleged securities trading and
consulting as separate Schedule C business activities.
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Last modified: November 10, 2007