-8-
Our finding in this regard has the following consequences.
There is no duplication with respect to the rent expense
deduction claimed on the Schedules C for the years 1993 and 1994.
So much of respondent’s reduction of the $137,150 settlement
payment as is attributable to a duplication for those years is
rejected. With respect to 1995, we find that all but $6,000 of
the $85,092 rent deduction claimed for that year has been
duplicated in the rent deduction claimed for 1997. Therefore
$79,000 of the $137,150 settlement payment is not allowable in
1997.
Respondent imposed an addition to tax under section
6651(a)(1). Briefly stated, that section provides for an
addition to tax if a return is not filed on or before the date
that the return is due, unless the delay in filing is due to
reasonable cause and not willful neglect.
Petitioners’ 1997 return was received and filed by
respondent on October 16, 1998. According to respondent’s
records, that return was due to be filed on or before August 15,
1998. Petitioners do not dispute the date that respondent claims
to have received their 1997 return; furthermore, they make no
claim that imposition of the addition to tax is inappropriate
because they had reasonable cause for their failure to file a
timely return. Instead, they claim that their 1997 return was
not filed late. According to petitioners, they had been granted
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