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by Taxman. Petitioner therefore must include the $2,147 as
compensation income in 1990.
2. Unreported Income in 1991
In 1991, Taxman accepted a stereo worth $509 from a client
in exchange for a corresponding reduction in the client’s bill.
Petitioner then gave the stereo to his girlfriend, Ms. Lane.
Respondent argues that petitioner’s income should be adjusted by
$509 to reflect the value of the stereo. Petitioner argues that
he gave Ms. Lane the stereo and in exchange she worked in a
Taxman Express office for 1 month. We believe the stereo was
compensation to Ms. Lane from Taxman. Ms. Lane credibly
testified that she worked at the Taxman Express office because
she wanted to pay petitioner back for the stereo after she
received it. We believe the arrangement between petitioner and
Ms. Lane resulted in a benefit to Taxman that is equal to or
greater than the value of the stereo. As a result, we do not
believe that the value of the stereo is income to petitioner.
Taxman paid petitioner $2,052 in 1991. Petitioner argues
that as a result of the 1987 audit, the $2,052 was removed from
his personal Schedule C because it was an expense of Taxman. He
claims that in order for Taxman to take the expense as a
deduction, the revenue agent advised him that Taxman should
reimburse petitioner for the amount of the expense in 1991.
Therefore, petitioner argues that the $2,052 was not income to
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