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Cal-Neva partnership does not constitute adequate disclosure.
Accepting his testimony and concluding that the correct amount of
the underpayment should have been calculated based on $13,150 in
disallowed losses rather than $14,783.69, the underpayment would
still be substantial for purposes of section 6661.
Petitioners have made several arguments that we address
briefly. First, in their answering brief, petitioners argue for
the first time that the notice in this case was sent after the
expiration of the period of limitations. In this context,
however, the period of limitations was suspended during the time
that the partnership action was pending and for 1 year
thereafter. Sec. 6229(d). The decision in the partnership
action did not become final until the expiration of the time for
filing a notice of appeal, which was 90 days after entry of the
decision. Secs. 7481(a)(1), 7483. Thus, the notice in this case
was sent approximately 3 weeks before the expiration of the
period of limitations.
Second, petitioners argue that the underpayment should be
further reduced by allowance of $5,000 as their out-of-pocket
expenses in relation to the Cal-Neva investment. There is no
authority, however, that would allow them to deduct their out-of-
pocket amounts in the year of the investments. See, e.g., Marine
v. Commissioner, 92 T.C. 958, 974-980 (1989), affd. without
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