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turning over to her mother the bulk of the proceeds from cashing
her pay checks. Petitioner submitted a Form W-2 reflecting 1993
wages paid by Drug Festival, Inc., to Jennifer in the gross
amount of $6,330. After Federal, State, and payroll taxes were
withheld, Jennifer's net wages amounted to $5,078. Subtracting
$250, approximately the amount she kept for herself during the
year, we find that Jennifer gave petitioner $4,828 in 1993.
Finally, petitioner testified that in January 1993, her
friend Vilma Reye lent her $500 in order to help her pay her
bills, and that in April 1993, petitioner repaid the $500 loan.
We find the testimony of petitioner and her daughter to be
credible with respect to these items. We therefore find that
petitioner has carried her burden of proving that the foregoing
amounts were received from nontaxable sources and were
erroneously included in respondent's determination, thereby
overstating petitioner's unreported income by $8,199. We
therefore sustain respondent's revised determination of
unreported income only to the extent of $17,449.
B. Rental Expenses Reported on Schedule E
Respondent's determination added $6,166 to petitioner's rent
income. The adjustment consisted of a $2,800 computational error
relating to the way petitioner allocated her Schedule E expenses
to the rental portion of the two-family residence. Petitioner
has conceded the computational error portion of the adjustment.
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