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THE WITNESS: Got you. A very good point at hand.
Actually, when my accountant was showing me the
figures, I was quite astonished with that. The only
reasoning behind the legal and professional fees as you
specified is at the time I basically -- my parents had
financial trouble as far as money was concerned and
with the building that I was in, et cetera.
So unfortunately, I wound up paying her quite a
bit more than I would anyone else to try to -- so that
I can try to resolve their issues. * * *
Regarding the rental property, petitioner indicated that he
rented the apartment to assist his family. Petitioner testified
that he “enjoyed helping the students and at the same time not
only was I helping the students but I was helping my parents. * *
* It was just something I was out to do to help students and help
my family.”
As to the earned income credit, the money paid by petitioner
to his mother accounted for over 95 percent of his parents’ gross
income. Ms. Awadallah’s salary allowed her and Mr. Awadallah to
claim the earned income tax credit under section 32, resulting in
a refund of $761 for 1996. Mr. Antonious also prepared Mr. and
Ms. Awadallah’s joint income tax return, and his testimony
indicates that he planned the transactions so they could claim
the credit under section 32.
Petitioner generated losses in both 1995 and 1996 which
reduced his gross income and effectively lowered his tax
liability. We conclude that the expenses here at issue, if
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