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(1) Are petitioners liable for 1994 for self-employment
tax? We hold that they are not.
(2) Are petitioners entitled for 1994 to the deductions
that they are claiming? We hold that they are not.
(3) Are petitioners liable for 1994 for the accuracy-
related penalty under section 6662(a)? We hold that they are to
the extent stated herein.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
Petitioners resided in Murrieta, California, at the time the
petition was filed.
At various times during the last four months of 1993 and the
first six months of 1994, petitioner William Barry Blythe (Mr.
Blythe) acquired title to ten parcels of residential real prop-
erty (parcels), each of which was subject to an outstanding
mortgage loan at the time he acquired title. He acquired such
title without having paid any cash or having assumed any such
loan. With respect to six of the ten parcels, Mr. Blythe ac-
quired title within one-to-several months after a notice of
default had been recorded on each such parcel by the holder of
the outstanding mortgage loan thereon (lender). With respect to
the remaining four parcels, the lender recorded a notice of
default on each such parcel within two-to-several months after
Mr. Blythe acquired title to each parcel.
Mr. Blythe held title (1) to three of the ten parcels until
the lenders foreclosed on them during 1994 and (2) to the remain-
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