                          T.C. Memo. 1998-355



                        UNITED STATES TAX COURT



                   TIMOTHY E. BUTLER, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 13509-97.              Filed October 5, 1998.



        Timothy E. Butler, pro se.

        Michael O'Donnell and George W. Bezold, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


        ARMEN, Special Trial Judge:   This case was heard pursuant to

the provisions of section 7443A(b)(3) and Rules 180, 181, and

182.1


        1
       Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for 1993 and 1994, the
taxable years in issue, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
                              - 2 -

     Respondent determined deficiencies in petitioner's Federal

income taxes for the taxable years 1993 and 1994 in the amounts

of $4,084 and $2,561, respectively.   Respondent also determined

accuracy-related penalties under section 6662(a) for negligence

or intentional disregard of rules or regulations for the same

taxable years in the amounts of $816.80 and $512.20,

respectively.

     After concessions by the parties,2 the issues for decision

are as follows:

     (1) Whether petitioner is entitled to dependency exemptions

for three individuals in 1993 and one individual in 1994.     We

hold that he is not.

     (2) Whether petitioner qualifies for head-of-household

filing status in 1993 and 1994.   We hold that he does not.




     2
        Petitioner concedes that he received unreported rental
income in the amounts of $5,400 in 1993 and $2,025 in 1994; that
he received State income tax refunds in the amounts of $224 in
1993 and $414 in 1994; and that he paid mortgage interest and
real estate taxes in the respective amounts of $2,920 and $1,963
in 1994.
     Respondent concedes that petitioner's State income tax
refund received in 1994 is not taxable if petitioner did not
receive a tax benefit in respect of such tax (i.e., if
petitioner's itemized deductions for 1993 do not exceed the
standard deduction for 1993); that petitioner's mortgage interest
and real estate taxes should be allocated equally between
Schedule A and Schedule E in 1994; and that petitioner is
entitled to Schedule E deductions in 1994 for cleaning and
maintenance in the amount of $600 and repairs in the amount of
$1,350.
                                - 3 -

     (3) Whether petitioner is entitled to itemized deductions

for charitable contributions in 1993 and 1994.     We hold that he

is not.

     (4) Whether petitioner is entitled to an itemized deduction

for gambling losses in 1993.   We hold that he is not.

     (5) Whether petitioner is entitled to an itemized deduction

for union dues in 1993.   We hold that he is not.

     (6) Whether petitioner must include in gross income refunds

of State income taxes he received in 1993 and 1994.     We hold that

he must include the refund received in 1993 but not the refund

received in 1994.

     (7) Whether petitioner is entitled to Schedule E deductions

in 1994 for cleaning and maintenance and for repairs in excess of

the amounts conceded by respondent.     We hold that he is not.

     (8) Whether petitioner is entitled to a Schedule E deduction

for utilities in 1994.    We hold that he is to the extent provided

herein.

     (9) Whether petitioner is liable for the accuracy-related

penalty under section 6662(a) for negligence or intentional

disregard of rules or regulations in 1993 and 1994.     We hold that

he is to the extent provided herein.
                                - 4 -

                          FINDINGS OF FACT

     Some of the facts have been stipulated, and they are so

found.    Petitioner resided in Milwaukee, Wisconsin, at the time

that his petition was filed with the Court.

     During the years in issue, petitioner was employed as a

local bus driver by Milwaukee Transport Services, Inc. and

received wages in the amount of $34,697 in 1993 and $35,043 in

1994.    As a bus driver, petitioner was a member of Local 998 of

the Amalgamated Transit Union (AFL-CIO) and paid union dues in

the amounts of $331.65 in 1993 and $360.57 in 1994.

     During the years in issue, petitioner owned a duplex house

located at 2402 North 40th Street in Milwaukee (the Duplex).

Petitioner used part of the Duplex as his personal residence and

rented the other part to a third party.

     Petitioner was not married during the years in issue.

However, during part of 1993 he lived with a woman by the name of

Marie and her three children: Lynn, who was 12; Bob, who was 11;

and Robin, who was 10.    Petitioner is neither the adoptive father

nor the foster father of any of these children.

     During the latter part of 1993, "some turmoil" developed

between petitioner and Marie.   As a consequence, Marie

permanently left the household with her three children.

     At or about the time of the "turmoil" with Marie, petitioner

became involved with another woman by the name of Alisha.

Petitioner lived with Alisha and her son James, who was 5 in
                                - 5 -

1994, through the end of the calendar year 1994.    Petitioner is

neither the adoptive father nor the foster father of James.

     Petitioner filed an income tax return (Form 1040) for 1993.

On his return for that year, petitioner claimed head-of-household

filing status and also claimed a total of three dependency

exemptions, one each for Lynn and Robin, whom petitioner

identified as his daughters, and one for Bob, whom petitioner

identified as his son.    Petitioner reported adjusted gross income

(AGI) in the amount of $34,697; i.e., the amount of his wages

from working as a bus driver.

     Petitioner attached Schedule A (Itemized Deductions) to his

1993 return and claimed the following deductions:

          State/local income taxes                       $2,043
          Charitable contributions:
            contributions by cash or check    $3,000
            other than by cash or check          400       3,400
          Union dues                                         360
          Gambling loss                                    5,000

     Petitioner did not report any gambling income on his 1993

return.

     Petitioner received a refund of State income tax in the

amount of $224 in 1993.    Petitioner did not report the receipt of

this refund on his 1993 return.

     Petitioner failed to report rental income in the amount of

$5,400 on his 1993 return.

     Petitioner also filed a Form 1040 for 1994.    On his return

for that year, petitioner claimed head-of-household filing status
                               - 6 -

and also claimed a dependency exemption for James, whom

petitioner identified as his infant son.   Petitioner attached

Schedule A to his return.   Included among the deductions claimed

on Schedule A were the following:

     Real estate taxes                               $1,963
     Home mortgage interest                           2,920
     Charitable contributions:
          contributions by cash or check   $200
          other than by cash or check       400         600

     Petitioner also attached Schedule E (Supplemental Income and

Loss) to his 1994 return and reported rents received (in the

amount of $3,375) and expenses with respect to the Duplex.

Petitioner underreported rents received by $2,025.    Among the

deductions claimed on Schedule E were the following:

             Cleaning & maintenance     $1,090
             Mortgage interest           1,460
             Repairs                     2,300
             Taxes                         981
             Utilities                     800

     Petitioner duplicated deductions for (home) mortgage

interest and (real estate) taxes claimed on his Schedule A and

Schedule E for 1994.   In this regard, during 1994 petitioner paid

mortgage interest in the total amount of $2,920 and real estate

taxes in the total amount of $1,963.   Petitioner deducted each of

those amounts in its entirety as an itemized deduction on

Schedule A and one-half of each of those amounts as a rental

expense on Schedule E.
                                 - 7 -

     Petitioner received a refund of State income tax in the

amount of $414 in 1994.   Petitioner did not report the receipt of

this refund on his 1994 income tax return.

     Petitioner relied upon a commercial service to prepare his

income tax returns for 1993 and 1994.

     In the notice of deficiency, respondent determined, inter

alia: (1) Petitioner is not entitled to any dependency exemptions

for 1993 and 1994; (2) petitioner is entitled to "single" filing

status, rather than head-of-household filing status, in 1993 and

1994; (3) petitioner failed to substantiate the payment of any

(a) charitable contributions in 1993 and 1994 and (b) union dues

in 1993; (4) petitioner is not entitled to deduct any gambling

losses in 1993; (5) petitioner failed to substantiate the payment

of any claimed rental expenses in 1994 for cleaning and

maintenance, repairs, and utilities; (6) petitioner duplicated

deductions in 1994 for mortgage interest and real estate taxes on

his Schedules A and E; (7) petitioner failed to report the refund

of State income taxes in 1993 and 1994; and (8) petitioner is

liable for the accuracy-related penalty under section 6662(a) for

negligence or intentional disregard of rules or regulations.


                                OPINION

     Generally, the Commissioner's determinations are presumed

correct, and the taxpayer bears the burden of proving that those

determinations are erroneous.    Rule 142(a); INDOPCO, Inc. v.
                                  - 8 -

Commissioner, 503 U.S. 79, 84 (1992); Welch v. Helvering, 290

U.S. 111, 115 (1933).

     Issue (1): Dependency Exemptions - 1993 and 1994

     A taxpayer is allowed as a deduction an exemption for each

dependent.    Sec. 151(c)(1).    A dependent is defined as an

individual over half of whose total support is received from the

taxpayer.    Sec. 152(a).   In order to qualify as a dependent, an

individual must also be related to either the taxpayer in one of

the ways enumerated in section 152(a)(1) through (8) or a member

of the taxpayer's household within the meaning of section

152(a)(9).

     A son or daughter, or a stepson or a stepdaughter, of a

taxpayer may qualify as a dependent.      Sec. 152(a)(1) and (2).   A

child legally adopted by a taxpayer is treated as the taxpayer's

child.   Sec. 152(b)(2).    A foster child is also treated as the

taxpayer's child if such child is a member of the taxpayer's

household within the meaning of section 152(a)(9).      Id.

     Petitioner claimed dependency exemptions for Lynn, Bob, and

Robin in 1993 and for James in 1994.      Although petitioner

identified these individuals on his returns as his children, he

is not related to them by blood or marriage, nor is he their

adoptive or foster father.      Accordingly, petitioner must

establish, inter alia, that these individuals were members of

petitioner's household within the meaning of section 152(a)(9).
                                - 9 -

     Section 1.152-1(b), Income Tax Regs., provides that section

152(a)(9) applies to an individual who lived with the taxpayer

and was a member of the taxpayer's household during the entire

taxable year of the taxpayer.   Because Lynn, Bob, and Robin did

not live with petitioner and were not members of petitioner's

household during the entire calendar year 1993, they do not

qualify as petitioner's dependents for that year.     Accordingly,

we sustain respondent's determination on this matter.

     James may have lived with petitioner and may have been a

member of petitioner's household during the entire calendar year

1994.   Assuming arguendo that such was the case, James still does

not qualify as petitioner's dependent because petitioner failed

to establish that he provided more than half of James' support.

     In applying the support test, we evaluate the amount of

support furnished by the taxpayer as compared to the total amount

of support received by the claimed dependent from all sources.

Turecamo v. Commissioner, 554 F.2d 564, 569 (2d Cir. 1977), affg.

64 T.C. 720 (1975); sec. 1.152-1(a)(2)(i), Income Tax Regs.     In

other words, in order to establish that the taxpayer provided

more than half of the claimed dependent's support, the taxpayer

must first show, by competent evidence, the total amount of

support received by the claimed dependent from all sources during

the year in issue.   Otherwise, the taxpayer cannot be said to

have established that he or she provided more than half of the

support for the claimed dependent.      E.g., Blanco v. Commissioner,
                              - 10 -

56 T.C. 512, 514-515 (1971); Seraydar v. Commissioner, 50 T.C.

756, 760 (1968); Stafford v. Commissioner, 46 T.C. 515, 518

(1966).

     At trial, petitioner offered nothing other than unsupported

and conclusory statements that he supported James.   Such proof,

which adds nothing to the claim made by petitioner on his 1994

return, is insufficient to carry petitioner's burden.   Cf.

Seaboard Commercial Corp. v. Commissioner, 28 T.C. 1034, 1051

(1957) (a taxpayer's income tax return is a self-serving

declaration that may not be accepted as proof for the deduction

or exclusion claimed by the taxpayer); Halle v. Commissioner, 7

T.C. 245 (1946) (same), affd. 175 F.2d 500 (2d Cir. 1949).

Accordingly, we sustain respondent's determination on this

matter.

     Issue (2): Filing Status - 1993 and 1994

     In order to qualify for head-of-household filing status,

petitioner must satisfy the requirements of section 2(b).

Pursuant to that section, and as relevant herein, an individual

qualifies as a head of household if the individual is not married

at the close of the taxable year and maintains as his home a

household that constitutes for more than one-half of the taxable

year, the principal place of abode of an individual who qualifies

as the taxpayer's dependent within the meaning of section 151.

Sec. 2(b)(1)(A)(ii).   However, a taxpayer is not considered to be

a head of household by reason of an individual who would not be a
                               - 11 -

dependent for the taxable year but for section 152(a)(9).     Sec.

2(b)(3)(B)(i).

     We have previously held that petitioner is not entitled to

dependency exemptions for Lynn, Bob, and Robin in 1993 and for

James in 1994.    Accordingly, petitioner does not qualify as a

head of household.    However, even if we had held that petitioner

is entitled to dependency exemptions under section 152(a)(9),

petitioner would still not qualify, as a matter of law, as a head

of household because of the limitation set forth in section

2(b)(3)(B)(i).    Accordingly, we sustain respondent's

determination that petitioner is not entitled to head of

household filing status but rather "single" filing status.

     Issue (3): Charitable Contributions - 1993 and 1994

     Charitable contributions are deductible under section 170

only if verified under regulations prescribed by the Secretary.

Sec. 170(a)(1).    Under the applicable regulations, contributions

of money are required to be substantiated by one of the

following: (1) A canceled check; (2) a receipt from the donee

charitable organization showing the name of the donee, the date,

and amount of the contribution; or (3) in the absence of a

canceled check or receipt, other reliable written records showing

the name of the donee, the date, and amount of the contribution.

Sec. 1.170A-13(a)(1), Income Tax Regs.; see Thorpe v.

Commissioner, T.C. Memo. 1998-123.      Contributions of property

other than money are required to be substantiated by a receipt
                              - 12 -

from the donee charitable organization showing the name and

address of the donee, the date and location of the contribution,

and a description of the property in detail reasonably sufficient

under the circumstances.   Sec. 1.170A-13(b)(1), Income Tax Regs.;

see Thorpe v. Commissioner, supra.     Where it is impractical to

obtain a receipt, taxpayers must maintain reliable written

records of their donations.   Sec. 1.170A-13(b)(1); see Daniel v.

Commissioner, T.C. Memo. 1997-328.

     At trial, petitioner alleged that he made donations to the

Unification Church in Mequon, Wisconsin.    According to

petitioner, he would deliver a check to the church to be held "as

collateral" for a few days until he came back with cash, at which

time the church would return his check uncashed as a receipt.

The following testimony by petitioner portrays the alleged

arrangement:

     I gave it [my check] to the individuals [the clergy] to
     hold for me, because they didn't have a check -- a
     receipt program of their own. So with my good faith, I
     said, Hold the check. I'm going to bring you the money
     in just a couple days to help you. Then you can stamp
     the check paid that I gave you the money, and I'll take
     my check. It will act as our receipt. And that's the
     way we did our business like that.


In response to the question why the church did not cash the check

and thereby let the canceled check serve as a receipt, petitioner

testified:   "Because I had other plans for my funds in the bank

and I wanted to bring them the cash."    Petitioner testified
                              - 13 -

further that he obtained cash from people that either owed him

money or would lend him money.   Thus:

          Q: Where did you get the money, the cash money,
     that you gave to these preachers and other individuals?
     Where would that come from?

          A: Well, it would come from a number of sources.
     * * * People that owe me money, different people * * *.
     You know, I have a number of friends that own tractor-
     trailers. I have a number of friends that would tell
     me, or I'll lend you the money, because it's something
     I really wanted.

          Q: They would lend you the money to give to a
     charity?

          A: Yes. Because if I -- because I had other
     plans for my money in the bank.

          Q: Even though you had sufficient amounts in your
     checking account to cover the check?

          A: * * * I had a sufficient amount -- in the
     checking account.

          Q: But you go and borrow the money, rather than
     have them cash the check?

          A: Right.   Because there are other things I want
     to do with it.

     We are unable to accept petitioner's testimony at face

value.   See Tokarski v. Commissioner, 87 T.C. 74, 77 (1986) (the

Court is not required to accept a taxpayer's testimony as

gospel).   Regardless, petitioner's testimony, which was

uncorroborated, does not satisfy the substantiation requirements

of section 170(a)(1) and section 1.170A-13(a)(1) and (b)(1),

Income Tax Regs.   Under other circumstances, we might be inclined

to estimate the amount of contributions made by a taxpayer.    See
                               - 14 -

Cohan v. Commissioner, 39 F.2d 540, 544 (2d Cir. 1930).     In order

to do so, however, we must have some basis in fact upon which an

estimate can be made, Vanicek v. Commissioner, 85 T.C. 731, 743

(1985); otherwise, any allowance would amount to unguided

largesse, Williams v. United States, 245 F.2d 559, 560 (5th Cir.

1957).   Here, however, we have no basis whatsoever on which to

make a reasonable estimate.    Accordingly, we sustain respondent's

determination on this issue.

     Issue (4): Gambling Loss - 1993

     Petitioner claimed a deduction for a gambling loss in the

amount of $5,000 on his Schedule A for 1993.

     Petitioner contends that he lost money gambling in 1993 and

is therefore entitled to deduct his loss.    Respondent contends,

inter alia, that because petitioner did not report any gambling

winnings in 1993, petitioner is not entitled to deduct any

gambling loss for that year.    We agree with respondent.

     Section 165(d) provides for a deduction for losses from

gambling transactions but only to the extent of gains from such

transactions.   Sec. 165(d); sec 1.165-10, Income Tax Regs.   In

other words, a taxpayer is not entitled, as a matter of law, to

deduct a net gambling loss.    Therefore, because petitioner did

not report any gambling winnings on his income tax return for

1993, he is not entitled to any deduction for a gambling loss in

that year.
                                - 15 -

     Issue (5): Union Dues - 1993

     Petitioner claimed a deduction for union dues in the amount

of $360 on his Schedule A for 1993.

     Documentary evidence introduced by petitioner at trial

establishes that petitioner paid union dues to Local 998 of the

Amalgamated Transit Union (AFL-CIO) in the amount of $331.65 in

1993.   Petitioner contends that his exhibit contains a

typographical error and that the amount actually paid was the

amount claimed on his return.    However, the matter is moot

because of the 2-percent floor on miscellaneous itemized

deductions prescribed by section 67.

     Section 67(a) provides that in the case of an individual,

miscellaneous itemized deductions are allowable only to the

extent that the aggregate of such deductions exceeds 2 percent of

the individual's AGI.   A deduction for union dues constitutes a

miscellaneous itemized deduction.    Sec. 67(b).   In petitioner's

case, the deduction for union dues is petitioner's only

miscellaneous itemized deduction in 1993, and 2 percent of

petitioner's AGI for that year exceeds the amount that petitioner

seeks to deduct.   Accordingly, no deduction is allowable.
                              - 16 -

     Issue (6): State Income Tax Refunds

     Petitioner received refunds of State income taxes in the

amount of $224 in 1993 and in the amount of $414 in 1994, neither

of which was reported in income.

     Generally, pursuant to section 111 and the regulations

thereunder, if State income tax was deducted on a Federal income

tax return for a prior taxable year and if such deduction

resulted in a tax benefit to the taxpayer (i.e., a reduction of

Federal income tax) for such prior taxable year, then a

subsequent recovery by the taxpayer (i.e., a refund) of such

State income tax must be included in the taxpayer's gross income

for Federal tax purposes in the year in which the recovery is

received.   Kadunc v. Commissioner, T.C. Memo. 1997-92, and cases

cited therein.

     Petitioner presented no evidence to show that he did not

realize a tax benefit from the deduction of State income tax on

his Federal income tax return for 1992.    Accordingly, we sustain

respondent's determination that the refund of State income tax in

the amount of $224 in 1993 is includable in petitioner's gross

income for that year.

     In contrast, the record demonstrates that petitioner will

not receive a tax benefit from the deduction of State income tax

on his Federal income tax return for 1993 because the standard

deduction to which he is entitled for 1993 exceeds the amount of
                              - 17 -

itemized deductions that are allowable for that year.3

Accordingly, the refund of State income tax in the amount of $414

in 1994 is not includable in petitioner's gross income for that

year.4

     Issues (7) and (8): Schedule E Deductions - 1994

     Respondent disallowed entirely Schedule E deductions claimed

by petitioner in 1994 for cleaning and maintenance, repairs, and

utilities.   At trial, respondent conceded that petitioner had

substantiated, and was therefore entitled to deduct, expenses for

cleaning and maintenance in the amount of $600 and repairs in the

amount of $1,350.   The balance of such deductions, and the entire

deduction claimed for utilities, remain in issue.

     At trial, petitioner introduced no persuasive evidence that

he is entitled to deductions for cleaning and maintenance and for

repairs in excess of the amounts conceded by respondent.

Accordingly, we sustain respondent's determination as modified by

respondent's concession at trial.

     Insofar as the deduction for utilities is concerned, the

record does not permit a finding that petitioner expended the

amount claimed on his return (i.e., $800).   However, we are

satisfied that petitioner did, in fact, incur expenses for

     3
        For 1993, an individual with a "single" filing status is
entitled to a standard deduction in the amount of $3,700. Sec.
63(c). This amount exceeds petitioner's allowable itemized
deductions (i.e., State income tax in the amount of $2,043).
     4
         See supra note 2.
                                - 18 -

utilities in respect of the rental portion of the Duplex.

Accordingly, applying the rationale of Cohan v. Commissioner, 39

F.2d at 544, and using our best judgment in the absence of

documentary evidence, we conclude that petitioner is entitled to

a deduction for utilities in the amount of $600.

     Issue (9): Accuracy-related Penalty

     Section 6662(a) and (b)(1) provides that if any portion of

an underpayment of tax is attributable to negligence or disregard

of rules or regulations, then there shall be added to the tax an

amount equal to 20 percent of the amount of the underpayment that

is so attributable.   The term "negligence" includes any failure

to make a reasonable attempt to comply with the statute, and the

term "disregard" includes any careless, reckless, or intentional

disregard.   Sec. 6662(c).

     By virtue of section 6664(c)(1), the accuracy-related

penalty is not imposed with respect to any portion of an

underpayment if it is shown that there was a reasonable cause for

such portion and that the taxpayer acted in good faith with

respect to such portion.     Whether a taxpayer acted in good faith

depends upon the pertinent facts and circumstances.     Estate of

Monroe v. Commissioner, 104 T.C. 352, 366 (1995), revd. in part

on another ground and remanded 124 F.3d 699 (5th Cir. 1977); sec.

1.6664-4(b)(1), Income Tax Regs.    The most important factor is

the extent of the taxpayer's effort to assess his or her proper
                                - 19 -

tax liability.     Beard v. Commissioner, T.C. Memo. 1995-41; sec.

1.6664-4(b)(1), Income Tax Regs.

     The record in this case amply demonstrates negligence in the

preparation of petitioner's 1993 and 1994 income tax returns.

For example, petitioner failed to report any rental income in

1993, and he underreported a significant percentage of rental

income in 1994.    However, the fact remains that petitioner's 1993

and 1994 income tax returns were prepared by a commercial

service.   We therefore, analyze whether this fact relieves

petitioner from liability, in whole or in part, for any penalty.

     As a general rule, the duty of filing accurate tax returns

cannot be avoided by placing responsibility on an agent.      Metra

Chem Corp. v. Commissioner, 88 T.C. 654, 662 (1987); Pritchett v.

Commissioner, 63 T.C. 149, 174 (1974).    However, a taxpayer may

avoid the accuracy-related penalty by showing that his reliance

on the advice of a professional, such as a commercial return

preparer, was reasonable and in good faith.    Sec. 1.6664-4(b)(1),

Income Tax Regs.    Specifically, the taxpayer must establish that

complete and correct information was provided to the return

preparer and that the item incorrectly claimed or reported on the

return was the result of the preparer's error.    See Ma-Tran Corp.

v. Commissioner, 70 T.C. 158, 173 (1978).     A taxpayer's reliance

on the advice of a preparer is not reasonable or in good faith

where a cursory review of the taxpayer's return would reveal an

omission from income.     Metra Chem Corp. v. Commissioner, supra.
                               - 20 -

     Although petitioner relied on a commercial service to

prepare his 1993 and 1994 income tax returns, the record does not

establish that petitioner provided complete and correct

information to the preparer.   There is no basis, therefore, to

completely absolve petitioner from liability for the accuracy-

related penalty.   However, we think that petitioner should not be

liable for the accuracy-related penalty insofar as the

underpayment of tax for 1993 is attributable to the disallowed

deduction for the gambling loss.

     A return preparer should know that, as a matter of law,

losses from wagering transactions are allowable only to the

extent of the gains from such transactions.   Sec. 165(d).

Petitioner was not aware of this provision, and in view of the

particular facts and circumstances of this case, we do not think

that petitioner could be expected to have been aware of such

provision.   Therefore, even though the record does not establish

that petitioner provided complete and correct information to his

return preparer, the deduction claimed for the $5,000 net

gambling loss was the result of the preparer's error.

Accordingly, to this extent, respondent's determination is not

sustained.
                                - 21 -

Conclusion

     To reflect our disposition of the disputed issues, as well

as the parties' concessions,5

                                          Decision will be entered

                                     under Rule 155.




     5
        In giving effect to petitioner's concession of unreported
rental income in 1993, see supra note 2, the parties are directed
to allow as an offset for allocable expenses the amount of
$2,625. Cohan v. Commissioner, 39 F.2d 540, 544 (2d Cir. 1930).
