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maintenance. On their Schedule E for 1993, petitioners did not
claim any expenses for gardening, or repairs and maintenance.
However, on their Schedules C for 1992 and 1993, petitioners
deducted repairs and maintenance expenses of $2,700 and $4,964
respectively.
At trial, the parties stipulated the admissibility of a
written statement from Billy Diamond, who confirmed that he was
paid $3,400 annually from 1992 through 1994 to perform general
maintenance and repair work and to water plants. We find facts
accordingly. As limited by respondent’s concession, we hold that
petitioners are entitled to deduct the amounts paid to Mr.
Diamond for 1992 and 1993, subject to the passive loss limitation
of section 469.
2. Schedule E Legal Expense
On their Schedule E for 1993, petitioners reported barter
income of $18,000 and a corresponding deduction of $18,000 for
the value of legal services furnished to them in lieu of rent.
On brief, respondent notes that, although the notice of
deficiency for 1993 allowed a deduction for only 6 percent of the
$18,000 legal expense that petitioners claimed on Schedule E, no
adjustment was made to the corresponding $18,000 of rental income
petitioner reported under his barter arrangement with that same
attorney. Respondent now concedes that, if and to the extent we
find the legal services the attorney performed were worth
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