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7. Whether petitioner is liable for accuracy-related
penalties for 1995 and 1996. We hold that she is.
Adjustments in the notice of deficiency relating to the
self-employment tax, the related deduction under section
164(f), the deductible amount of petitioner’s medical expenses,
and the earned income credit are purely mechanical matters, the
resolution of which is dependent on our disposition of the
disputed issues.
Background
Some of the facts have been stipulated, and they are so
found.
Petitioner resided in Ponte Vedra Beach, Florida, at the
time that her petition was filed with the Court.
During the years in issue, petitioner was a self-employed
marketing consultant. Petitioner offered advertising and
marketing services to a clientele consisting principally, if
not exclusively, of medical doctors.
During 1995, petitioner’s principal client was Dr. Elliott
Jacobs (Dr. Jacobs), a plastic surgeon in New York City.
During 1996, Dr. Jacobs was petitioner’s only client.
Petitioner publicized and promoted Dr. Jacobs’ medical
practice by, among other ways, placing periodic advertisements
in the New York Post. Dr. Jacobs compensated petitioner for
her services, and he reimbursed her for the cost of the
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