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counseling setting look like a business office is detrimental to
the counseling session. Accordingly, petitioners use the
downtown office to meet with and counsel clients, but do not
research or attend to office work at the downtown location.
Instead, petitioners use two rooms in their personal residence to
store their books and office equipment and to prepare for
counseling sessions. Petitioners maintain that approximately 20
percent of their home was used as a home office during the years
in issue.
Petitioners started operating the Christian counseling
center sometime in 1988. In addition to counseling, petitioner
occasionally preaches on Sundays, teaches in church settings, and
administers sacraments. However, the only service for which
petitioner accepts remuneration is counseling.
Petitioners' Federal and State income tax returns for
taxable years 1988 and 1989 were audited by both the Internal
Revenue Service and the Alabama State Bureau of Revenue.
Petitioners' 1990 Federal income tax return, which was due
on October 15, 1991, pursuant to extensions of time to file, was
filed on March 3, 1992.
General Legal Principles
We begin by noting that, as a general rule, the
Commissioner's determinations are presumed correct, and the
taxpayer bears the burden of proving that those determinations
are erroneous. Rule 142(a); Welch v. Helvering, 290 U.S. 111,
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