Ronald P. Barranti and Stephanya M. Barranti - Page 8

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               Murray used petitioner's property as his principal                     
          residence.  Accordingly, in deciding this issue we first consider           
          whether the rent charged Murray reflects a fair rental for the              
          property.                                                                   
          1992 Activity                                                               
               Petitioner testified that she had a written agreement                  
          defining the rental terms with Murray, and that his girlfriend              
          and child lived in the house until January 1993.  Petitioners did           
          not, however, produce the rental agreement at trial.                        
          Furthermore, petitioners did not report any income or expenses              
          with respect to this activity on their 1992 return, or provide              
          any business records or other evidence to substantiate receipt of           
          the rental amounts.  Finally, petitioners did not call Murray or            
          his girlfriend to verify that they rented the house according to            
          the terms petitioner alleges.                                               
               Petitioner husband testified that petitioner spent                     
          considerable time preparing the house for her brother to rent,              
          that he overheard the amount of rent that petitioner and Murray             
          agreed upon, and that it was his understanding that petitioner              
          did receive the rent on a regular basis.  Conversely, petitioner            
          husband testified that he was not involved in anything to do with           
          the property, that he was uncertain of when Murray moved in or              
          out, and that he visited the house once while Murray was there              
          but he was uncertain when that was.                                         





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