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equipment and the office furniture in the World Medical/Dental
business. On December 6, 1988, petitioner and his mother entered
into an agreement whereby petitioner's mother would pay
petitioner $500 per month for the use of a used neon sign that
read "World Med/Dent".
On his 1989 and 1990 Schedules C, petitioner reported that
his principal business was a medical/dental office known as
"World Med/Dent" located on 16th Street, N.W., in Washington,
D.C. Petitioner reported income of only $10,000 and $12,500 on
his Schedules C for 1989 and 1990, respectively. In addition to
depreciation on the leased items, petitioner claimed advertising,
postage, laundry, travel, and supplies as Schedule C expenses in
1989 and 1990.
On his 1991 Schedule C, petitioner reported that his
principal business was a "Medical Office/Physician" located on
Irving Street, N.W., Washington, D.C. Petitioner received no
lease payments from his mother during 1991, and he retrieved his
equipment from his mother during April 1991.
During 1991, petitioner did not use the neon sign or any of
the dental equipment in his private medical practice.
Unreported Income
Dr. Marie Kay (Dr. Kay) was employed by World Medical/Dental
beginning in January 1988. According to Dr. Kay's employment
agreement, all equipment, furniture, and supplies of World
Medical/Dental were and were to remain the property of
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