Julie Pusateri - Page 6

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               We hold that the $8,320 reported by petitioner on the                  
          Schedule E was not rental income.  Petitioner admitted that this            
          amount was paid to her by an attorney.  Petitioner claimed this             
          was to help make up for the fact that she supplied her own                  
               Petitioner conceded that she did not incur any of the $1,680           
          of expenses claimed as deductions on her Schedule E.                        
          Respondent's disallowance of that amount is sustained.                      
               The next issue is respondent's allocation of the $8,320 of             
          Schedule E income to petitioner's Schedule C-1.  Petitioner                 
          argued that by claiming the $8,320 on her Schedule C-1 and                  
          reporting the $8,320 on her Schedule E, she merely made a "paper            
          transfer" of the $8,320 from her Schedule C-1 to her Schedule E.            
          It was not merely a paper transfer.  We agree with respondent               
          that this was done to avoid the payment of self-employment tax.             
          However, petitioner further argues that by disallowing the $8,320           
          rent deduction on her Schedule C-1, and then attributing $8,320             
          from Schedule E to Schedule C-1 income, respondent has double-              
          counted the $8,320.  We find it significant that the amounts of             
          $6,720 and $1,600 included in income on petitioner's Schedule E             
          correspond to the amounts of $6,720 and $1,600 petitioner                   
          deducted on her Schedule C-1.  We do not believe that petitioner            
          failed to report $8,320 of income.  Rather, we believe that                 
          petitioner tried to "transfer" $8,320 to her false Schedule E and           

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