Patrick C. Badell and Lillian A. Badell - Page 3




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          Kelso in the form of roofing services Kelso provided to Badell in           
          B&W’s 1995 fiscal year.  We hold that it did.                               
               2.   Whether B&W may deduct costs it advanced on behalf of             
          its clients of $24,680 for fiscal year 1995 and $37,799 for                 
          fiscal year 1996.  We hold that it may not.                                 
               3.   Whether petitioners Patrick Badell and Lillian Badell             
          (the Badells) and petitioners Ronald Wilson and Donna Wilson (the           
          Wilsons) are liable for the accuracy-related penalty for                    
          negligence under section 6662(a) for 1994, 1995, and 1996.  We              
          hold that they are.                                                         
               Section references are to the Internal Revenue Code in                 
          effect during the years in issue.  Rule references are to the Tax           
          Court Rules of Practice and Procedure.  References to Badell and            
          Wilson are to Patrick Badell and Ronald Wilson, respectively.               
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
          A.   Petitioners                                                            
               The Badells lived in Indianapolis, Indiana, when they filed            
          their petition.  The Wilsons lived in Rushville, Indiana, when              
          they filed their petition.                                                  
          B.   Badell & Wilson, P.C.                                                  
               Badell and Wilson are attorneys.  They each own 50 percent             
          of the stock of B&W, an S corporation incorporated on June 3,               
          1982.  B&W’s office is located in Rushville.  Badell was B&W’s              






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