-7-
On March 7, 2005, respondent sent petitioner an FPAA
determining adjustments to the above expenses. In the FPAA,
respondent determined that In Touch had overstated its deductions
for consulting fees, marketing expenses, professional fees, and
amortization.8 Respondent also determined that the at-risk
amounts of In Touch’s members must be reduced and that the
capital contributed by In Touch’s members as of December 31,
2000, was $50,000.
Tax Court Litigation
On May 27, 2005, petitioner filed his petition for
readjustment of partnership items. A trial was held in Oklahoma
City, Oklahoma, on March 9, 2006.
Petitioner, who was a member of In Touch during 2000, was
the only witness who testified at trial on In Touch’s behalf.
Petitioner, over respondent’s objection, attempted to introduce
copies of seven promissory notes, each dated December 31, 2000.9
The promissory notes were as follows:
8 Respondent allowed In Touch’s startup costs of $11,408,
consisting of meals and entertainment of $277, bank charges of
$20, printing costs of $111, and rent of $11,000. Respondent
recomputed In Touch’s allowable amortization expense deduction
for 2000 ($11,408 x 7/60 = $1,331).
9 Petitioner also introduced a promissory note (Exh. 17-P)
that he had executed in favor of In Touch. Respondent did not
object to this exhibit.
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