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accounting or tax return preparation.
On his Schedules C for 1988, 1989, and 1990, petitioner
listed his principal business or profession as "Med. Doctor &
Home Construction Co", "Medicing [sic] & Construction", and "Med.
Doctor & Contractor", respectively. On each return there was
only one Schedule C.
Petitioner reported $261,269, $270,658, and $317,334 in
gross receipts from his medical practice for 1988, 1989, and
1990, respectively. Petitioner determined his gross receipts for
the years in issue by totaling the amounts reported to him by
Form 1099 payors. During the audit of petitioner in 1991 (the
audit), he told Revenue Agent Harold Jung (Mr. Jung) that 99.9
percent of his patients paid for medical services through
insurance, Medicare, or Medi-Cal; therefore adding up the Forms
1099 was the most appropriate way to determine his gross
receipts.
Petitioner claimed various items on Schedule C of his tax
returns. As costs of goods sold3 (COGS) of his medical practice,
petitioner claimed expenditures for capital improvements to real
property and wages paid in the amounts of $31,176, $38,368, and
3 The use of the term "cost of goods sold" is for
convenience only and does not imply a finding that such amounts
were cost of goods sold.
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