Raymond J. and Ilene H. Pavelko - Page 3

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          effect for the years in issue, and all Rule references are to the           
          Tax Court Rules of Practice and Procedure.                                  
               Respondent determined deficiencies in petitioners’ Federal             
          income taxes of $2,417, $3,469, $4,236, and $3,276, and accuracy-           
          related penalties of $483.40, $693.80, $847.20, and $655.20 for             
          the taxable years 1996, 1997, 1998, and 1999.                               
               The sole issue for decision is whether petitioner husband              
          (petitioner) engaged in certain activities for profit during each           
          of the years in issue.1  Respondent concedes the application of             
          the accuracy-related penalties in this case.                                
               Some of the facts have been stipulated and are so found.               
          The stipulations of fact and the attached exhibits are                      
          incorporated herein by this reference.  Petitioners resided in              
          West Salem, Wisconsin, on the date the petition was filed in this           
               Petitioners filed a joint Federal income tax return for each           
          of the years in issue.  With these returns, petitioners filed               
          Schedules C, Profit or Loss From Business, for several                      
          activities.  In 1996, petitioners filed a Schedule C which named            
          petitioner as the proprietor and listed “rental” as the principal           
          business.  This schedule reflected the following loss:                      

          1Petitioners also argue in their petition that petitioner                   
          was “able to engage in a trade or business”, and that he was not            
          precluded from doing so by any medical disability.  Petitioner’s            
          physical or mental ability to engage in a trade or business is              
          not being questioned in this case.                                          

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