Kenneth E. Perry and Mary A. Hofer - Page 1

                                 T.C. Memo. 1997-417                                  


                               UNITED STATES TAX COURT                                


                  KENNETH E. PERRY AND MARY A. HOFER, Petitioners v.                  
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      


                  Docket No. 21336-94.         Filed September 18, 1997.              


                  Bruce W. Powell and Michael H. Gertner, for                         
             petitioners.                                                             
                  John J. Boyle, for respondent.                                      


                       MEMORANDUM FINDINGS OF FACT AND OPINION                        
                  WHALEN, Judge:  Respondent determined the following                 
             deficiencies in and additions to petitioners' joint Federal              
             income tax for the years in issue:                                       








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