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improper characterization and netting; and (3) Hawthorne
significantly benefited from the improper characterization and
netting.
Charlton does not cite anything in the record to support his
contentions, and the record shows that some of his contentions
are incorrect. First, Charlton contends that Hawthorne is
partially responsible for improperly characterizing rental
property costs and self-employment tax netting errors. However,
the record shows that Charlton prepared the tax return for 1994.
We believe that the improper characterization of the rental
property expenses and self-employment tax netting errors were his
errors, and that Hawthorne did not know of those errors. Second,
Charlton contends that Hawthorne significantly benefited from the
improper characterization of rental property expenses. It
appears that Charlton, and not Hawthorne, benefited from the
errors on the 1994 tax return relating to the rental property
because he received and used the income tax refund for 1994 and
Hawthorne did not. Costs of improvements to the rental
properties are added to the basis in the properties because we
held that they are capital expenses. Charlton will benefit from
the fact that the basis was increased because he received the
rental property in the divorce. Hawthorne testified that she did
not read the return, but her testimony on this point does not
establish that respondent’s determination that Hawthorne is
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