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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
facilities.
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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