Hugh and Linda Janow - Page 3

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            this Court in Janow v. Commissioner, T.C. Memo. 1996-289 (Janow                               
                  Petitioners resided in West Nyack, New York, when their                                 
            petition was filed.                                                                           
                  During 1980, Hugh Janow (petitioner) was a general partner                              
            in a limited partnership, Federal Arbitrage Company (Federal).                                
            Federal is one of several partnerships that comprise respondent's                             
            Arbitrage Management National Tax Litigation Project.  Petitioner                             
            is also a practicing member of the Bar of this Court.                                         
                  For taxable year 1980, petitioner received a Schedule K-1                               
            from Federal reflecting his distributive share of items of                                    
            partnership income and loss, reported by Federal.  The Schedule                               
            K-1 shows that petitioner received $20,000 as a guaranteed                                    
            payment in that year.                                                                         
                  On Schedule E of their 1980 Federal income tax return,                                  
            petitioners reported, with respect to Federal, a loss in the                                  
            amount of $130,260.  Petitioners also reported the $20,000                                    
            guaranteed payment received by petitioner in that year.                                       
                  In the explanation of adjustments attached to the notice of                             
            deficiency, respondent used petitioners' partnership loss as                                  
            reported on their 1980 return to make an adjustment.  Respondent                              
            did not make any determinations or adjustments with regard to the                             
            guaranteed payment petitioner received from Federal in 1980 and                               
            reported on petitioners' return for that year.                                                

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