Creed J. Pearson - Page 2




                                         -2-                                          
                                   Additions to Tax                                   
                                     Sec.         Sec.        Sec.                    
                Year Deficiency     6651(f)    6651(a)(2)     6654                    
                1999   $379,134 $274,850.40 $94,776.00 $18,346.93                     
                2000    281,581    204,144.05   70,394.50   15,040.43                 
                2001    452,670    328,185.75 113,167.50    18,090.37                 
                2002    109,345     79,275.13   20,775.55    3,653.96                 
                2003     70,143     50,853.68    9,118.59    1,835.66                 
          All section references are to the Internal Revenue Code in effect           
          for the years in issue, and all Rule references are to the Tax              
          Court Rules of Practice and Procedure.  After concessions,1 the             
          issues remaining for decision are:                                          
               (1)  Whether petitioner is entitled to any expense                     
          deductions claimed on Schedule A, Itemized Deductions, or                   
          Schedule C, Profit or Loss From Business, above those that                  
          respondent concedes.  We hold that he is not;                               
               (2)  whether petitioner may audit an organization that is              
          not a party to this case and pay the taxes he owes from the                 
          proceeds of that audit.  We hold that the Internal Revenue Code             
          (the Code) does not permit this offset against petitioner’s                 
          income tax deficiency;                                                      




               1 Petitioner concedes that he received income in the amounts           
          that respondent determined for the years in issue.  Respondent              
          concedes that petitioner is entitled to some Schedule A itemized            
          deductions and Schedule C business expense deductions.                      





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