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showed net profits (viz., $99,000 net profit from art sales and
$7,372 net profit from Psychological Testing Services), and not
the Schedules C that showed losses (viz., $2,925 loss from
commodities and other investments and $44,375 loss from New Life
Center). Consequently, petitioner deducted in his 1989 return
the entire $20,000 that he contributed to the SEP. That deduc-
tion exceeded (by $5,075) 25 percent of the aggregate amount
(viz., $59,702) of the results shown in the various Schedules C
of that return that petitioner reported as his "Business income"
(business income) on page 1, line 12 of that return.
With respect to the $30,000 contribution that petitioner
made to the SEP for 1990, petitioner deducted $16,912 in his
return for that year. That deduction equaled 25 percent of the
aggregate amount (viz., $67,648) of the results shown in the
various Schedules C of that return that petitioner reported as
his business income for 1990. With respect to the $26,000
contribution that petitioner made to the SEP for 1991, petitioner
deducted that entire amount in his return for that year. That
deduction equaled 24.91 percent of the amount (viz., $104,371)
shown in Schedule C of that return that petitioner reported as
his business income for 1991.
At the time that Mr. McVeigh prepared petitioner's returns
for the years at issue, Mr. McVeigh did not know of any adverse
tax consequences that might result if petitioner's retirement
plan contribution for each such year exceeded the amount allow-
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