Mary Ann and Wilson R. Collins - Page 3

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            for 1989, 1990, and 1991; and (3) whether petitioners are liable                             
            for the addition to tax under section 6651(a)(1) for the 4 years                             
            at issue.2                                                                                   
                  Some of the facts were stipulated.  Those facts, with the                              
            annexed exhibits, are so found and are incorporated herein by                                
            reference.  At the time the petition was filed, petitioners,                                 
            husband and wife, were residents of Oxon Hill, Maryland.                                     
                  Petitioner is a schoolteacher.  During the years at issue,                             
            petitioner was also engaged in a trade or business activity that                             
            she described as a beauty consultant.  Essentially, the activity                             
            she was engaged in was that of a representative for the Mary Kay                             

                  Respondent issued three notices of deficiency for the 4                                
            years at issue.  After the notices of deficiency were issued,                                
            petitioner met with an Appeals officer for respondent, and, as a                             
            result, respondent either conceded or made additional allowances                             
            on several of the adjustments in the notices of deficiency.  At                              
            trial, the parties advised the Court that these adjustments were                             
            considered settled, with respondent conceding the allowances of                              
            the Appeals officer and petitioner conceding those adjustments                               
            that had not been totally allowed by the Appeals officer (except                             
            as to the three remaining issues described above).  The parties                              
            did not submit to the Court a listing of the various adjustments.                            
            Counsel for respondent referred to some of these adjustments                                 
            during the trial, but the settled issues were not formalized in a                            
            written agreement nor made part of the stipulation.  In addition                             
            to these concessions, respondent, at trial, conceded petitioners'                            
            entitlement to a rental expense deduction for roof repairs for                               
            the year 1991 in the amount of $3,480.  This item had not been                               
            claimed on petitioners' 1991 income tax return, nor was it                                   
            brought up by petitioners in the audit process.  The item was                                
            brought up by petitioner with the Appeals officer, who                                       
            acknowledged the expenditure but treated it as a capital                                     
            expenditure and allowed a $100 depreciation deduction for 1991.                              
            The effect of respondent's concession at trial is to allow the                               
            entire amount of $3,480 as a deduction for 1991 and elimination                              
            of the $100 depreciation deduction allowed by the Appeals                                    

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