                          T.C. Memo. 1999-328



                       UNITED STATES TAX COURT



                    MARY ANN TOBIN, Petitioner v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 12577-96.               Filed September 30, 1999.



     Robert Thomas Blackburn, Jr., Chris Meinhart, and Scott R.

Cox, for petitioner.

     Rebecca Dance Harris, Edsel Ford Holman, Jr., and Robert B.

Nadler, for respondent.



              MEMORANDUM FINDINGS OF FACT AND OPINION


     COLVIN, Judge:    Respondent determined deficiencies in

petitioner's Federal income tax of $29,178 for 1990 and $35,937

for 1991.   Respondent also determined that petitioner is liable
                                -2-

for an accuracy-related penalty for negligence under section

6662(c) of $5,836 for 1990 and $7,187 for 1991.

     During the years in issue, petitioner deducted certain costs

related to establishing public display gardens on her farm.

Respondent determined that the display gardens and the farm were

separate activities, and that petitioner did not operate the

display gardens with a profit objective.     See sec. 183.   After

concessions, the issues for decision are:

     1.   Whether, for purposes of section 183, petitioner's

display gardens undertaking1 (known as Broadmoor Gardens) and

farming undertaking are one activity, as petitioner contends, or

two activities, as respondent contends.     We hold that they are

one activity.   Respondent concedes that petitioner prevails on

the section 183 issue if Broadmoor Gardens and petitioner's farm

are one activity.   Thus, we hold that petitioner operated

Broadmoor Gardens for profit in 1990 and 1991.

     2.   Whether, as respondent contends, depreciation of the

addition to petitioner's residence built in 1988 and 1989, which

includes a conservatory used for Broadmoor Gardens, is subject to

the restrictions of section 280A.     We hold that it is.




     1
       For purposes of sec. 183, two or more "undertakings" may
be one "activity". Sec. 1.183-1(d)(1), Income Tax Regs. We
refer to the display gardens and farm as "undertakings" because
one of the issues in dispute is whether they were one activity.
                                 -3-

     3.     Whether petitioner is liable for the accuracy-related

penalty for negligence under section 6662(c) for 1990 and 1991.

We hold that she is not.2

                        I.   FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

A.   Petitioner

     Petitioner has lived in Irvington, Kentucky, since 1941

(including when she filed her petition), and on a farm since

1969.

     Petitioner graduated from the University of Kentucky with a

degree in accounting.   Petitioner was a Kentucky State

representative from 1976 to the beginning of 1984.    She was

Kentucky State auditor from 1984 to January 1988.    Petitioner ran

for the Kentucky State Senate in 1992 but lost in the general

election.   Petitioner is on the boards of directors of a family

owned telephone company, a bank holding company, and two banks.

Petitioner and her brother own a controlling interest in the

Brandenburg Telephone and First State Bank in Brandenburg,

Kentucky.

     Petitioner's friend, Brucie Beard (Ms. Beard), also lives in

petitioner's home.


     2
       In light of our holding on the tax issues, petitioner's
motion for relief is moot insofar as it requests that we shift
the burden of proof, grant summary judgment, or suppress
evidence.
                                 -4-

B.   Petitioner's Farm

     Petitioner owned about 3,300 acres of mostly contiguous

Kentucky farmland (including about 1,900 acres of cropland) in

1990 and 1991.   Petitioner raises cattle and horses and grows

corn, wheat, hay, and tobacco at her farm.   Petitioner developed

part of her farm into a public display garden called Broadmoor

Gardens, discussed below at paragraph I-D.   Petitioner grew no

corn or tobacco on her farm during the years in issue because she

leased the acres available for growing tobacco and participated

in the corn set-aside program.

C.   Petitioner's Residence

     Petitioner's residence was built in 1968 and 1969.

     1.   The Addition

     Petitioner added an addition to her residence in 1988 and

1989, at a cost of $623,027.   She added a conservatory (about

2,470 square feet or about 32' x 74'), a bedroom and office

(hereafter called "petitioner's room") (875 square feet), an

office closet (about 104 square feet), a second bedroom

(hereafter called "Ms. Beard's room") (about 468 square feet), a

bathroom containing a hot tub (about 625 square feet), a closet

that adjoins both petitioner's and Ms. Beard's rooms (about 256

square feet), and an attached structure called a "pole barn"

(about 1,680 square feet).    The addition is connected to the side

of petitioner's house.
                                    -5-

     Petitioner used the pole barn to care for mares for the 2

weeks before they were ready to foal, to foal horses, and to

store lawn mowers and farm equipment.         She occasionally parked

her cars in the pole barn.     There is one door from the pole barn

to petitioner's bedroom and one to the closet.

     2.      The Conservatory and Petitioner's Room

     The conservatory contains many plants and has large glass

windows across the front.     The conservatory has one front door

and one side door to the outside.         Three rooms in the addition

are connected to the conservatory by double glass doors:

petitioner’s room, the bathroom with the hot tub, and Ms. Beard’s

room.     Next to the conservatory is a catering kitchen.      The doors

from the conservatory to petitioner's room were generally not

locked during the day because people came to water plants or feed

doves kept there when petitioner was not home, e.g., for a few

months each winter when petitioner and Ms. Beard were in Florida.

     Petitioner has a barn which is about 300 yards from her

house.     The front door of the conservatory is visible from the

front of the barn.     The back of the house is not visible from the

front of the barn.

     3.      Petitioner's Records

     Petitioner generally keeps her farm, financial, and other

personal records in her room.       Ms. Beard has a desk in

petitioner's room.     Some of petitioner's records are in boxes
                                -6-

around Ms. Beard's desk.   Petitioner's room also contains

petitioner's bed and a credenza with built-in filing cabinets.

She sometimes works in bed, and she usually keeps books, a

computer, and other papers at her bed.

     Petitioner kept her bank statements for each year in a

drawer with that year's tax documents, such as Forms W-2.    At the

end of the year, petitioner put her bank statements, canceled

checks, receipts for paid bills for the farm, her Forms 1099, and

any other tax-related records in a box labeled for that year

beside the desk to give to her certified public accountant,

Joseph Richardson (Richardson), to prepare her return.

Richardson is a partner in the Louisville accounting firm of

Richardson, Pennington & Skinner (RP&S).   Petitioner also kept

records for past years in boxes in her room.   Petitioner filed

spiral-bound copies of her tax returns, one per folder, in the

credenza.

     Ms. Beard kept some of her tax records in the credenza, and

stored her bank statements, mortgage information, vehicle

registration, and personal correspondence in petitioner's room.

Petitioner and Ms. Beard occasionally handled each other's

records.

D.   Broadmoor Gardens

     In the mid-1980's, the University of Kentucky and state

agricultural officials began promoting alternatives to growing
                                 -7-

tobacco.   About that time, petitioner began looking for other

sources of revenue to replace tobacco as her main cash crop.

Petitioner's farm is located on U.S. Highway 60, which is the

main road from Louisville to Owensboro, Kentucky.    She wanted to

find a way to use her farm to make money from people using U.S.

Highway 60.   She considered many alternatives, such as a

vegetable stand, a recreational vehicle park, a flower cutting

garden, a chuck wagon and show, and a petting zoo.

     Ms. Beard was experienced in flower gardening and enjoyed

arranging flowers and gardening.   Petitioner, however, did not

particularly like flowers or gardening.

     Petitioner and Ms. Beard visited some public display gardens

in Europe in spring 1985, and in the United States in the late

1980's.    Petitioner believed that she could develop a profitable

public display garden.   She thought people would pay to see a

public display garden like those she and Ms. Beard had seen in

other States and abroad because her farm was in a good location

and Kentucky had no other similar gardens.   Petitioner also

believed that, if she could attract people to the gardens, they

would buy produce from the farm.

     Petitioner had no income from Broadmoor Gardens in 1990 and

1991.   Broadmoor Gardens opened to the public in 1993.   Its

features include:   A display garden and conservatory, including

two rose gardens, an all-white "moon" garden, a rock garden with
                                 -8-

pool and fountain, an English garden, water gardens (indoor and

outdoor), a Japanese garden with koi pool, a shade garden,

several animal topiaries, a pond with black and white swans, an

artificial stream through one of the gardens, a 2-mile trail for

hayrides and hiking through wild flower meadows and woodlands,

and domestic animals such as chickens, peacocks, ducks, other

fowl, and pygmy goats.    There was also a gift shop, which sold

items such as birdhouses, handmade art objects from Kenya, and

other knickknacks.

     Petitioner and Ms. Beard, and occasionally their friend

Michael Patterson (Patterson) and their employee Clinton Haynes

conducted public tours of Broadmoor Gardens.    Visitors were taken

through the rooms in petitioner's residence that existed before

she built the addition (including the family room, living room,

dining room, and two kitchens), and also the conservatory,

petitioner's room, the bathroom/hot tub, and Ms. Beard's room.

     Many tropical plants were displayed in the conservatory.

The conservatory also contained a patio garden and garden

furniture for visitors.    Petitioner used the conservatory

primarily to display plants to show to the public.    She also made

it available to rent for weddings.     Petitioner hosted the wedding

of Ms. Beard's daughter in 1990, and, in 1992 (after the years in

issue), two political events.    Ms. Beard held a surprise birthday

party for petitioner in 1991 in the conservatory.    Petitioner and
                                -9-

Ms. Beard also had a political reception and a couple of parties

and family gatherings at petitioner's home during which guests

walked through the conservatory on dates not specified in the

record.

     Petitioner contracted with a nursery in Brandenburg,

Kentucky, to grow seedlings for the conservatory until she built

her own greenhouse sometime after Broadmoor Gardens opened in

1993.

     Petitioner did not advertise Broadmoor Gardens in 1990 or

1991.   She paid $1,530 in 1992, $37,923 in 1993, $11,235 in 1994,

$3,597 in 1995, and $1,719 in 1996 to advertise Broadmoor

Gardens.

     Broadmoor Gardens opened on the first of April each year and

closed when visitors stopped coming in mid-to-late fall.

     Petitioner obtained a general business license for Broadmoor

Gardens in 1993.   She had no business license for the farm.   She

had commercial liability insurance for Broadmoor Gardens through

Lloyd's of London because her farm insurance policy did not cover

tourists who visited the gardens.

     Petitioner managed both the farm and Broadmoor Gardens.

Petitioner and Ms. Beard had an informal, unwritten joint venture

agreement under which Ms. Beard would share part of any profits

from Broadmoor Gardens in exchange for her efforts.
                               -10-

     Petitioner worked on the farm and in the gardens.    For

example, she delivered colts, fed calves, cut bushes, mowed,

removed the dead heads of flowers, planted flower bulbs, and

cleaned the ponds.

     Petitioner's employees generally worked both on the farm and

in the gardens.   However, each worker had responsibilities

related mostly to either the gardens or the farm.   Petitioner

used some equipment and some of the facilities, such as the pole

barn, for both the farm and the gardens.   During the years in

issue, petitioner had one bank account that she used for the

farm, Broadmoor Gardens, and for her personal expenses.

E.   Petitioner's Federal Income Tax Returns and the Notice of
     Deficiency

     Petitioner assembled all of her records relating to

Broadmoor Gardens and her farm and gave them to Richardson to

prepare her tax returns.

     Petitioner calculated that $32,850 of the $623,027 cost of

remodeling her home related to personal use.   She estimated that

this was the cost of Ms. Beard's room, the bathroom (but not the

hot tub), and the closet.   She began to depreciate $590,177

(i.e., $623,027 - $32,850) on her 1988 and 1989 returns under the

heading "greenhouse".   Petitioner deducted the following

depreciation related to the "greenhouse" from 1988 to 1996:
                               -11-

                     Year                 Amount
                     1988                 $2,492
                     1989                 48,998
                     1990                 71,943
                     1991                 62,038
                     1992                 57,169
                     1993                  -0-
                     1994                  -0-
                     1995                  -0-
                     1996                  -0-

     Petitioner reported on the Schedules F (Profit or Loss from

Farming) she attached to her returns for 1990 to 1996 that her

farm and Broadmoor Gardens were one activity.      Petitioner

incurred losses for the farm and Broadmoor Gardens in each of

those years, whether the calculation is made for the farm and

Broadmoor Gardens as one or two activities.   On her Schedules F

for 1990 to 1996, petitioner reported income and expenses from

raising cattle, horses, and tobacco, agricultural payments, and

income from a Colorado rental property.   She reported

depreciation of a greenhouse on a Schedule F for each year from

1990 to 1992.   Petitioner reported the following amounts of gross

receipts, interest expense deductions, losses, and depreciation

on her Schedules F for 1983 to 1996:
                                 -12-

                                           Losses
            Gross                        (including
Year       receipts       Interest      depreciation)   Depreciation

1983        $10,593         $9,535       ($37,950)        $8,372
1984          3,875         12,574        (32,786)         4,090
1985          6,212          5,270        (35,469)        15,330
1986         16,791          -0-         (189,357)        27,986
1987        152,256         92,488       (441,830)        62,513
1988        124,778        165,686       (597,344)       112,479
1989        112,918        242,162       (665,058)       153,479
1990        156,342        278,819       (618,068)       163,002
1991        229,360        207,716       (436,238)       128,721
1992        163,245        167,674       (394,552)       126,696
1993        166,079        143,677       (431,075)        61,849
1994        114,463        153,340       (418,001)        41,582
1995        117,872        197,563       (474,332)        56,055
1996        107,276        224,345       (595,778)        79,213

       Respondent mailed a notice of deficiency to petitioner on

March 25, 1996.    Respondent determined that Broadmoor Gardens and

petitioner's farm were separate activities and disallowed

petitioner's deductions for depreciation and other business

expenses related to Broadmoor Gardens.     Petitioner timely filed

her petition on June 17, 1996.

                             II. OPINION

A.     Whether Petitioner's Farm and Broadmoor Gardens Undertakings
       Were Separate Activities

       We must decide whether petitioner's farm and Broadmoor

Gardens were one or two activities in 1990 and 1991.      The

applicable regulations state that, generally, the most important

factors in deciding whether two or more undertakings are operated

as one activity or separate activities are the degree of

organizational and economic interrelationship of the
                                -13-

undertakings, the business purpose served by carrying on the

undertakings separately or together, and the similarity of the

undertakings.    See sec. 1.183-1(d)(1), Income Tax Regs.3   The

Commissioner generally accepts a taxpayer's characterization of

two or more undertakings as one activity unless it is artificial

or unreasonable.    See id.

     Respondent argues that, under section 1.183-1(d), Income Tax

Regs., Broadmoor Gardens and petitioner's farm were separate


     3
         Sec. 1.183-1(d)(1), Income Tax Regs., provides in part:

          (d) Activity defined--(1) Ascertainment of
     activity. In order to determine whether, and to what
     extent, section 183 and the regulations thereunder
     apply, the activity or activities of the taxpayer must
     be ascertained. For instance, where the taxpayer is
     engaged in several undertakings, each of these may be a
     separate activity, or several undertakings may
     constitute one activity. In ascertaining the activity
     or activities of the taxpayer, all the facts and
     circumstances of the case must be taken into account.
     Generally, the most significant facts and circumstances
     in making this determination are the degree of
     organizational and economic interrelationship of
     various undertakings, the business purpose which is (or
     might be) served by carrying on the various
     undertakings separately or together in a trade or
     business or in an investment setting, and the
     similarity of various undertakings. Generally, the
     Commissioner will accept the characterization by the
     taxpayer of several undertakings either as a single
     activity or as separate activities. The taxpayer's
     characterization will not be accepted, however, when it
     appears that his characterization is artificial and
     cannot be reasonably supported under the facts and
     circumstances of the case. If the taxpayer engages in
     two or more separate activities, deductions and income
     from each separate activity are not aggregated either
     in determining whether a particular activity is engaged
     in for profit or in applying section 183. * * *
                               -14-

activities.   Respondent contends:    (1) Broadmoor Gardens and the

farm did not have a close organizational and economic

interrelationship, (2) petitioner had no business purpose for

operating Broadmoor Gardens and the farm as one activity, and (3)

Broadmoor Gardens and the farm were not similar activities.

     We have applied various factors in deciding whether a

taxpayer's characterization of two or more undertakings as one

activity is unreasonable for purposes of section 183, such as:

(a) Whether the undertakings share a close organizational and

economic relationship, (b) whether the undertakings are conducted

at the same place, (c) whether the undertakings were part of a

taxpayer's efforts to find sources of revenue from his or her

land, (d) whether the undertakings were formed as separate

businesses, (e) whether one undertaking benefited from the other,

(f) whether the taxpayer used one undertaking to advertise the

other, (g) the degree to which the undertakings shared

management, (h) the degree to which one caretaker oversaw the

assets of both undertakings, (i) whether the taxpayers used the

same accountant for the undertakings, and (j) the degree to which

the undertakings shared books and records.    See Keanini v.

Commissioner, 94 T.C. 41, 46 (1990); Estate of Brockenbrough v.

Commissioner, T.C. Memo. 1998-454; Hoyle v. Commissioner, T.C.

Memo. 1994-592; De Mendoza v. Commissioner, T.C. Memo. 1994-314;

Scheidt v. Commissioner, T.C. Memo. 1992-9.
                                 -15-

     Applying these factors, we conclude that the farm and

Broadmoor Gardens undertakings were one activity.       Petitioner's

farm and Broadmoor Gardens had a close organizational and

economic relationship.   Both undertakings were conducted at

petitioner's farm, and both were attempts to make the farm

profitable.   Petitioner used her farmland for both undertakings.

     Petitioner created and developed Broadmoor Gardens in an

attempt to replace tobacco as the farm's main cash crop.       Both

the gardens and the farm required the planting, tending, and

harvesting of plants or crops.    Petitioner managed both

undertakings as one activity.    The farm and Broadmoor Gardens

shared the same employees and equipment.       Richardson was the

accountant for both undertakings.       Petitioner used the same

checking account and books for her farm and Broadmoor Gardens and

reported both undertakings on one Schedule F in each of the years

in issue.

     Respondent points out that petitioner reported income from

different undertakings, such as tobacco leases, corn subsidies,

and horse and cattle sales, on her Schedules F, and that the

common ownership of several undertakings does not mean they are a

single activity.   Respondent maintains that the only farming

activity conducted on petitioner's farm was the raising and

selling of cattle and horses, and that this activity was

conducted away from petitioner's residence.       We disagree that
                                 -16-

petitioner's various undertakings are not part of a single

farming activity.   Raising crops and animals, leasing cropland,

and participating in a Government agricultural subsidy program

may be one activity if they are attempts by the farmer to

generate income from the farm.    See, e.g., Hoyle v. Commissioner,

supra.

     Respondent relies on Drummond v. Commissioner, T.C. Memo.

1997-71, affd. in part and revd. in part without published

opinion 155 F.3d 558 (4th Cir. 1998), for the proposition that

two farm undertakings that are not conducted on the same land are

separate activities.   Respondent's reliance on Drummond v.

Commissioner, supra, is misplaced.      In Drummond, we held that the

taxpayer's horse and cattle undertakings were separate activities

because we were not convinced that the taxpayer intended to use

his herd of cattle to manage the pasture for his horses.       In

contrast, petitioner operated the gardens and farm as one

activity.

     Respondent contends that Broadmoor Gardens and petitioner's

farm were separate activities because petitioner and Ms. Beard

operated the gardens as a joint venture.     Respondent also

contends that the farm and Broadmoor Gardens did not depend on

the success of the other.   We disagree.    Respondent cites no

reason or authority to support the contentions that an

undertaking may not be part of an activity just because it is
                               -17-

operated as a joint venture, or that two undertakings may not be

one activity just because each does not depend on the success of

the other.

     Respondent contends that petitioner's farm and gardens are

too dissimilar to be one activity, and that petitioner had no

business purpose for operating the two undertakings together.

Respondent characterizes Broadmoor Gardens as a tourist

attraction and contends that a tourist attraction is clearly

separate from a farm.   We disagree.    The taxpayers in Hoyle v.

Commissioner, supra, and Sparre v. Commissioner, T.C. Memo. 1980-

45, attempted to attract the public to their farms to participate

in undertakings they devised in an attempt to supplement their

income from traditional farming activities, including guided

hunting, a gun club, and crabbing.     In Hoyle v. Commissioner,

supra, the taxpayer grew raspberries, soybeans, corn, and grain;

guided hunting; boarded horses; raised horses and cattle; bred

game birds; had a crabbing venture; raced thoroughbred horses;

and participated in agricultural set-asides.    According to Hoyle,

those undertakings were one activity for purposes of section 183.

     This case is like Hoyle v. Commissioner, supra, and Estate

of Brockenbrough v. Commissioner, supra, in that petitioner was

trying to find sources of revenue from her farm.    It is also

similar to cases where we held that horse breeding and other

undertakings involving horses were one activity.    See, e.g.,
                                -18-

Scheidt v. Commissioner, T.C. Memo. 1992-9 (horse farm and

stallion syndication); Mary v. Commissioner, T.C. Memo. 1989-118

(horse farm and horse racing); Yancy v. Commissioner, T.C. Memo.

1984-431 (same).    We conclude that petitioner operated her farm

and Broadmoor Gardens as one activity for purposes of section

183.

       Respondent concedes that petitioner prevails on the

Broadmoor Gardens issue if we hold that petitioner operated the

farm and Broadmoor Gardens as one activity.    Thus, we hold that

petitioner operated Broadmoor Gardens for profit in 1990 and

1991.

B.     Depreciation of the Addition

       1.   Applicability of Section 280A to the Addition

       Section 280A bars business deductions for a taxpayer's

residence, unless an exception applies.    Section 280A(c)(1)(A)

allows a taxpayer to deduct home office expenses if the taxpayer

uses the home office exclusively and regularly as the principal

place of any trade or business.    Petitioner points out that

visitors to Broadmoor Gardens toured her entire residence and

contends that section 280A does not apply to her residence

because it was her principal place of business, and she used all

of it for business purposes.    We disagree.   Section 280A applies

to any dwelling unit that is used during the year as a residence,

whether a taxpayer uses part or all of it for business.      See sec.
                               -19-

280A(a).   Petitioner lived in her residence in 1990 and 1991.

Thus, the restrictions of section 280A apply to the addition,

including the conservatory, because it was part of petitioner's

residence.

     Petitioner's reliance on Burkhart v. Commissioner, T.C.

Memo. 1989-417, for the proposition that section 280A was

intended to disallow expenses only where a taxpayer performs

some, as opposed to all, of his or her business in the taxpayer's

residence is misplaced.   In Burkhart, the taxpayer operated a

photographic studio in the basement of his residence.   We held

that section 280A applied to the studio because it was part of

the taxpayer's residence.   We did not consider whether section

280A does not apply if a taxpayer uses his or her entire

residence for business.

     2.    Section 280A(c)(5) Limitation

     A taxpayer's deductions for the business use of a residence

are limited to the amount that the gross income from business use

of the residence exceeds the amount of deductions allocable to

such use which are allowable regardless of whether the residence

was used for business (such as mortgage interest and property

taxes) plus deductions for expenses of the business which are not

allocable to the business use of the residence.   See sec.

280A(c)(5).
                                -20-

     Petitioner argues that the income against which we apply the

section 280A(c)(5) limitation is the gross income from the

Broadmoor Gardens and farm activity as a whole.    We disagree.

Section 280A(c)(5) specifically limits the taxpayer's deduction

for business use of a residence to the amount of income derived

from the business use of the residence.    Petitioner contends that

she earned $1,100 from tour tickets in 1990.    However, she

reported no ticket income on her 1990 return, and Broadmoor

Gardens did not open until 1993.   Thus, we conclude that

petitioner had no income from business use of her residence in

1990 and 1991, and that she may not deduct depreciation related

to her residence for 1990 and 1991.    See sec. 280A(c)(5)(A).4

     The result would not differ even if we considered all of the

income from petitioner's farm and garden activity.    That is

because, under section 280A(c)(5)(B)(ii), we would consider only

income in excess of expenses.   Petitioner had large losses from

her farm and garden activity in the years at issue.


     4
       To the extent deductions are disallowed under sec.
280A(c)(5), they may be carried forward to the succeeding taxable
year. See sec. 280A(c)(5), flush language. Sec. 168(e)(3)(D)
provides a 10-year period for depreciation for single purpose
horticultural structures as defined by sec. 168(i)(13)(B)(ii).
Petitioner contends that the conservatory is a single purpose
horticultural structure. Petitioner also contends that she used
the conservatory exclusively for business. Based on our holding
that petitioner may not depreciate any costs of the conservatory
in 1990 and 1991, we need not decide whether petitioner used the
conservatory exclusively for business in 1990 and 1991 or whether
the conservatory was a single purpose horticultural structure
under sec. 168(i)(13)(B)(ii).
                               -21-

C.   Accuracy-Related Penalty Under Section 6662

     Respondent determined that petitioner was liable for the

accuracy-related penalty for negligence under section 6662(a) and

(c) for 1990 and 1991.   Respondent now concedes that petitioner

is not liable for the negligence penalty for 1990 and 1991 except

for any deficiencies related to petitioner's depreciation of the

addition.

     Section 6662(b)(1) imposes a 20-percent penalty on the

portion of an underpayment attributable to negligence.

Negligence includes a failure to make a reasonable attempt to

comply with the Internal Revenue Code or to exercise ordinary and

reasonable care in that respect.   See sec. 6662(c).   Petitioner

bears the burden of proving that she was not liable for the

accuracy-related penalty imposed by section 6662(a).   See Rule

142(a).

     Respondent contends that petitioner was negligent because

the returns Richardson prepared included a deduction for

depreciation of parts of her residence despite the income limits

of section 280A and contained an allocation of 95 percent of the

costs of the addition to business.

     We disagree.   Good faith reliance on the advice of a

competent, independent tax professional may offer relief from the

imposition of the addition to tax for negligence.   See United

States v. Boyle, 469 U.S. 241, 251 (1985); Leonhart v.
                                 -22-

Commissioner, 414 F.2d 749, 750 (4th Cir. 1969), affg. T.C. Memo.

1968-98; Otis v. Commissioner, 73 T.C. 671, 675 (1980).

Richardson was fully aware of the facts about petitioner's

residence and Broadmoor Gardens.    Petitioner's reliance on

Richardson to prepare accurately her 1990 and 1991 returns was

reasonable.   Thus, we hold that petitioner is not liable for the

accuracy-related penalty for 1990 and 1991.

     To reflect the foregoing,


                                             An appropriate order

                                        will be issued.
