Valentina Perrah v. Commissioner - Page 2




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               The issues for our consideration are:  (1) Whether                     
          petitioner has shown entitlement to various Schedule C, Profit or           
          Loss From Business, deductions; and (2) whether the resulting               
          underpayment was due to a substantial understatement of income              
          tax and/or negligence so as to make petitioner liable for the               
          accuracy-related penalties under section 6662(a).1                          
                                  FINDINGS OF FACT                                    
               Petitioner Valentina Perrah resided in Mira Loma,                      
          California, at the time the petition was filed in this case.                
          Petitioner was a real estate broker who owned and operated a                
          Century 21 office in Mira Loma during taxable years 1994 and                
          1995.  This office operated under the name “Amera-Star Realty”,             
          and petitioner reported its income and deductions on a Schedule C           
          attached to her Federal income tax returns.                                 
               For taxable years 1994 and 1995, petitioner’s original                 
          individual income tax returns were prepared by petitioner’s                 
          accountant of approximately 7 years, Ron Kington.  Her Schedule C           
          reflected $239,481 of deductions for taxable year 1994 which                
          included, inter alia, $15,303 for advertising costs, $4,390 in              
          car and truck expenses, and $27,960 for other expenses such as              


               1 All section references are to the Internal Revenue Code in           
          effect for the years in issue, and all Rule references are to the           
          Tax Court Rules of Practice and Procedure, unless otherwise                 
          indicated.                                                                  





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