-2-
After concessions,2 the issues for decision are: (1)
Whether petitioners may exclude the gain on the sale of their
Berlin home under section 121; (2) whether petitioners may also
exclude the gain on the sale of the South Point Road lot under
section 121; and (3) whether petitioners are liable for a penalty
under section 6662(a).
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts, the exhibits attached thereto, and the
stipulation of settled issues are incorporated herein by this
reference. At the time they filed their petition, petitioners
resided in Hagerstown, Maryland.
Background
In 1976, petitioner Dr. J. Ramsay Farah (Dr. Farah) opened
his pediatric medical practice in Hagerstown, Maryland.3 Over
the years, petitioner Elizabeth Farah (Ms. Farah) also worked for
the medical practice assisting with various administrative
duties. However, she always worked from her home.
2Petitioners concede they are not entitled to a loss of
$45,733 from their Schedule E, Supplemental Income and Loss,
rental real estate activities, and they are not entitled to
Schedule C, Profit or Loss From Business, deductions of $64,915.
Petitioners also concede they failed to report State income tax
refunds of $3,354.
3At various times from 1980 through 1998, Dr. Farah operated
medical offices in Waynesboro, Pennsylvania, and Boonsboro,
Maryland, in addition to his Hagerstown practice.
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