2
Federal income taxes in the respective amounts of $285, $2,761,
and $2,130, and additions to tax for 1991 and 1992 pursuant to
section 6651(a)(1) in the amounts of $276 and $455, respectively.
References to petitioner are to Bernard Nadeau.
After a concession by respondent,2 the issues for decision
are: (1) Whether petitioners are entitled to deduct losses
attributable to petitioner's real estate rental activity, Nadeau
Rentals, in computing his net earnings from self-employment for
purposes of the self-employment tax; and (2) whether petitioners
are liable for additions to tax, pursuant to section 6651, for
failure to file timely returns for 1991 and 1992.
Some of the facts have been stipulated and are so found.
The stipulation of facts and the exhibits received into evidence
are incorporated by this reference. Petitioners resided in
Minneapolis, Minnesota, at the time they filed their petition.
Throughout the first half of the 1980's, petitioner
performed services as an agent for musicians. Petitioner also
held a real estate license. Petitioner wanted to get involved in
a business that would generate sufficient capital to allow him to
invest in real estate. In 1986, petitioner formed his own
business, Art Rep Services, to represent photographers.
2 Respondent concedes that petitioners have established the
amount of the loss from real estate activity resulting in a
recomputed deficiency of $1,709 and an addition to tax of $350
for the taxable year 1992.
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