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that that debt had been deducted in the 1986 joint return. Mr.
Morris confirmed that that debt had been deducted, albeit errone-
ously, in their 1986 joint return and advised her that they would
have to file an amended joint return for 1986 to correct that
error. Petitioner and Mr. Morris filed an amended joint return
for 1986 that did not claim the business bad debt deduction at
issue.
Meadows--Gross Income
The Form 1120S that Meadows filed for 1989 showed gross
receipts of $86,355 and ordinary income of $29,112. In their
joint return for 1989, petitioner and Mr. Morris reported income
from Meadows in the amount of $19,112.
On April 6, 1989, a deposit of $21,000 attributable to a
check drawn on the MCIC account was made into the Meadows account
at the Champaign National Bank. A $10,000 check drawn on the
Meadows account at the Champaign National Bank and payable to the
order of Mr. Morris cleared that account on April 17, 1989. That
$10,000 check and a check payable to Mr. Morris in the amount of
$16,500 that was drawn on the MCIC account were deposited on
April 14, 1989, into an account at Bloomington Federal
(Bloomington Federal account). On April 26, 1989, a $23,000
deposit was made into the Meadows account at the Champaign
National Bank attributable to a check drawn on the Bloomington
Federal account.
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