George Maciel - Page 10

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               Petitioner did not report any of the above-listed deposited            
          funds on his 1990, 1991, or 1992 returns.  Furthermore,                     
          petitioner’s accountants were not aware of this business activity           
          until after the IRS commenced its audit and investigation.12                
          F.  Rental Property Income                                                  
               During 1990, 1991, and 1992, petitioner owned and held                 
          numerous real properties for investment and lease.  One such                
          property was located at 41550 Boscell Road, Fremont, California             
          (the Boscell property).  In 1990, petitioner owned 50 percent of            
          the Boscell property with Thomas Viviano.  In May 1991, Thomas              
          Viviano sold his 50-percent interest in the Boscell property to             
          petitioner.                                                                 
               During the years at issue, the Boscell property was leased             
          to two tenants.  One tenant, PSB Trucking, rented space at the              
          Boscell property for $8,400 per month.  Petitioner reported                 
          rental income attributable to PSB Trucking of $50,400,13 $79,800,           
          and $100,800 for 1990, 1991, and 1992, respectively.                        





               12Petitioner argues that if unclaimed expense deductions are           
          considered, his racing business lost money.                                 
               13At trial, the parties stipulated that petitioner’s share             
          of the rental income from PSB Trucking with regard to the Boscell           
          Road property for 1990 is $46,200, rather than the amount                   
          petitioner reported, $50,400.  Respondent concedes that                     
          petitioner reported his proportionate share of the rental income            
          attributable to PSB Trucking for 1991 and 1992.                             





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