Lee B. Arberg and Melissa A. Quinn - Page 40




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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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