Alice Berger, et al. - Page 5

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          related penalty for 1989.                                                   
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
          The stipulations of fact filed by the parties and the                       
          accompanying exhibits are incorporated herein by this reference.            
          When petitioners filed their respective petitions, Alice Berger             
          resided in Vermont, and Howard Berger and Susan Berger resided in           
          Florida.                                                                    
               Howard Berger and Alice Berger were married in 1953.  During           
          the marriage, Alice Berger was not employed outside the home.               
          Prior to 1979, Howard Berger was an insurance salesman, and he              
          continued to receive renewal commissions through 1989.                      
               In 1979, Howard Berger purchased the Woodbine real property            
          and cemetery business, located in Oceanport, New Jersey, from               
          John and Lois Flock, for $100,000.  The Flocks had operated                 
          Woodbine as a cemetery for in-ground interments.                            
               Howard Berger continued the business of operating Woodbine             
          as a cemetery for in-ground interments.  From 1979 through 1989,            
          the income of Woodbine from the sale of cemetery plots, interment           
          fees, and headstones was reported on the cash basis method of               
          accounting, as were most expenses.   However, the cost of grave             
          plots ($23 per plot) was carried in an inventory account and                
          expensed for accounting and tax purposes when plots were sold.              
               By deed dated October 26, 1983, Howard Berger transferred              






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