Al Zuni of Arizona, Inc. - Page 1

















                                 T.C. Memo. 1999-74                                   


                               UNITED STATES TAX COURT                                


                       AL ZUNI OF ARIZONA, INC., Petitioner v.                        
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      
                            NASHAT KHALAF, Petitioner v.                              
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      


               Docket Nos. 18917-96, 18918-96.     Filed March 10, 1999.              


               Henry W. Tom and Rick Kilfoy, for petitioners.                         
               Rachael J. Zepeda, for respondent.                                     

                       MEMORANDUM FINDINGS OF FACT AND OPINION                        

               SWIFT, Judge:  In these consolidated cases, respondent                 
          determined deficiencies in petitioners' Federal income taxes,               
          additions to tax, and penalties, as follows:                                








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