Michael J. Downing and Sandra M. Downing - Page 17

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          convenience check issued by AT&T Universal Gold MasterCard into             
          one of their personal checking accounts.                                    
          F.   Tax Returns                                                            
               Petitioners timely filed “married filing separate” income              
          tax returns for both of the years in issue.  In each of these tax           
          returns, the respective petitioner correctly showed that                    
          petitioner’s spouse’s name and Social Security number at the                
          appropriate places.  Their tax returns for 1989 through 1993 also           
          were “married filing separate”.                                             
               For 1994 and 1995 petitioners reported adjusted gross income           
          and total tax as shown in table 3.                                          
                                       Table 3                                        
          Michael                     Sandra                                          
          Year    Adjusted Gross   Total Tax    Adjusted Gross   Total Tax            
          Income                        Income                                        
          1994        $8,360         $1,314         $17,877       $1,068              
          1995         8,926          1,456          17,700          946              
               On the 1994 and 1995 Schedules C, Michael reported gross               
          receipts, cost of goods sold, expenses, and net profit for the              
          plumbing business as shown in table 4.                                      
                                       Table 4                                        

          Year Gross Receipts Cost of Goods Sold Expenses Net Profit                  
          1994       $68,758           $44,780        $14,982       $8,996            
          1995       82,721            54,141         18,975         9,605            
               The tax returns for both petitioners were prepared by Jeanne           
          S. Duh� (hereinafter sometimes referred to as Duh�), a C.P.A.               






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