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advice he received from his income tax return preparer and that
the reductions represented repair and maintenance expenses of the
apartment rental business that were netted against rental income.
Petitioners also argue that the income tax return preparer
incorrectly, and without their knowledge, decided to deduct on
Schedule E of their income tax returns repair and maintenance
expenses without notifying petitioners. Petitioners argue
further that when they signed and filed their 1982 and 1983 joint
Federal income tax returns, they did not know that the returns
effectively double claimed repair and maintenance expenses and
underreported income from the apartment rental business.
For 1982 and 1983, respondent argues that petitioners
fraudulently understated income from their apartment rental
business on their joint Federal income tax returns and
accordingly that no period of limitations on assessment is
applicable to those years.
Petitioners agree that for 1982 and 1983 they understated
their taxable income from their apartment rental business and
that they underpaid their Federal income taxes. Accordingly,
petitioners’ underpayment of their Federal income taxes for 1982
and 1983 is established.
The evidence indicates and we so conclude that, on the 1982
and 1983 summary sheets, petitioner made the reductions to rental
income from petitioners' apartment rental business to reduce or
eliminate petitioners’ Federal income tax liabilities. Neither
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