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each Schedule C. Together with the wage income referred to above
and $30 in dividend income, the losses reported on the Schedules
C are taken into account in the adjusted gross income of $11,037
reported on petitioner’s return.
A personal exemption deduction, two dependency exemption
deductions, and the standard deduction applicable to a head of
household are subtracted from the adjusted gross income and
result in reported taxable income of $787. Applying the section
1 income tax rate applicable to a head of household, petitioner
reported an income tax liability of $118, which was reduced to
zero by a claimed credit for child and dependent care expenses.
A $754 earned income credit was claimed, which gave rise to a
refund in the same amount.
Petitioner was married as of the close of 1988. His spouse,
Debra A. Priestly, was employed as a registered nurse during
that year. Her untimely 1988 Federal income tax return, which
was prepared by petitioner, was filed in late September 1989.
The return shows the Diamond Bar address as her home address.
The income reported on the return includes wages of $26,379,
interest of $99, and dividends of $303. Included with her
return is a Schedule C for a business described as a “property
management” service. With one minor exception, the income and
deductions reported on this Schedule C are identical to the items
reported on the “property management” Schedule C included with
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