Bill McDonald - Page 2

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          After considering the parties’ concessions and stipulations to be           
          bound by the outcome of other cases, the issues remaining for our           
          consideration are:  (1) Whether petitioners’ partnership’s 1989             
          income was understated; (2) whether petitioners correctly                   
          reported their distributive shares of partnership income;                   
          (3) whether either petitioner failed to report income with                  
          respect to various items respondent determined to be includable             
          in his income; (4) whether either petitioner is liable for                  
          additional self-employment tax; and (5) whether either petitioner           
          is liable for the fraud penalty under section 6663.1                        
                                  FINDINGS OF FACT2                                   
               Petitioners Bill McDonald (McDonald) and Richard D. Maynard            
          (Maynard) resided in California at the times each of their                  
          petitions was filed in these cases.  McDonald and Maynard each              
          filed his 1989 income tax return reflecting that his filing                 
          status was “single”.  Although McDonald and Maynard were each               
          married as of the close of 1989, they, along with their                     
          respective spouses, filed for and received annulments of their              
          marriages during 1994.  The question of whether McDonald and                
          Maynard were married or single for Federal income tax purposes,             
          considering the annulments of their respective marriages, was               
          decided by this Court in McDonald v. Commissioner, T.C. Memo.               

               1 Section references are to the Internal Revenue Code in               
          effect for the year under consideration.  Rule references are to            
          this Court’s Rules of Practice and Procedure.                               
               2 The parties’ stipulation of facts and exhibits are                   
          incorporated by this reference.                                             

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