Stephen and Ann Schwalbach - Page 3

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          this reference.  Petitioners resided in River Falls, Wisconsin,             
          when they petitioned the Court.  They filed a joint 1994 Federal            
          income tax return which was prepared by a certified public                  
          accountant (the C.P.A.).  Petitioners presented the C.P.A. with             
          all relevant information to prepare the return, and he prepared             
          the return based on his understanding of the tax law.  As of the            
          time that the C.P.A. prepared the return, he had been practicing            
          accountancy as a C.P.A. for approximately 20 years, and he had              
          performed work for petitioners, including preparing their                   
          individual and business tax returns, for at least 16 years.                 
          Petitioners rely on the C.P.A. for business and tax advice.                 
               Stephen Schwalbach (Dr. Schwalbach) practices dentistry in             
          River Falls.  He is employed full time by Associated Dentists of            
          River Falls, f.k.a. River Falls Dental Association (Associated              
          Dentists), a personal service corporation that he owns equally              
          with another dentist named Timothy Knotek.  Associated Dentists'            
          business is based in a building (the River Falls building) owned            
          by petitioners and let to Associated Dentists under a lease dated           
          January 1, 1992.                                                            
               Petitioners' 1994 Schedule E, Supplemental Income and Loss,            
          reported net income of $50,556 on the rental of the River Falls             
          building to Associated Dentists.  This schedule also reported               
          that petitioners had realized a $1,670 loss renting a commercial            
          building sited in Hudson, Wisconsin, and that they had realized             
          $877 of net income renting a residential house sited in River               

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