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disallowed itemized deductions. They contest: (1) Mr. Marzullo's
liability for the fraud addition to tax for 1986; (2) Mrs.
Marzullo's liability for tax, claiming that Mrs. Marzullo is an
innocent spouse; (3) the self-employment tax; and (4) Mrs.
Marzullo's liability for the fraud addition to tax. Thus, the
issues for decision are: (1) Whether Mrs. Marzullo is entitled to
relief as an innocent spouse pursuant to section 6013(e); (2)
whether Mrs. Marzullo is liable for self-employment tax relating to
income from MPM subsequent to August 31, 1987; and (3) whether Mr.
Marzullo is liable for the fraud addition to tax for 1986, and
whether Mrs. Marzullo is liable for the fraud additions to tax for
1986, 1987, and 1988.
All section references are to the Internal Revenue Code as in
effect for the years under consideration. All Rule references are
to the Tax Court Rules of Practice and Procedure. Petitioner
Anthony J. Marzullo is herein referred to as Mr. Marzullo and
petitioner Mary P. Marzullo as Mrs. Marzullo. Together they are
referred to as petitioners.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. The
stipulation of facts and the attached exhibits are incorporated
herein by this reference.
Petitioners, husband and wife, resided in Glen Arm, Maryland,
at the time they filed their petition. Petitioners timely filed
joint Federal income tax returns for 1986, 1987, and 1988, the
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