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the losses would result in rightful tax refunds. Petitioner’s
mere lack of understanding of the legal or tax consequences
pertaining to the claimed losses is insufficient, by itself, to
afford petitioner relief from the resulting liability.
Petitioner made several expenditures that were relatively
“unusual or lavish” when compared to the Pierces’ past or normal
spending patterns. After the receipt of the tax refunds,
petitioner contributed $490,000 of capital to DDC. In addition,
loans from shareholder balances on MCU’s yearend financial
statements ranged from $414,200 to $705,200 during the period
1992 to 1998.7 DDC’s financial statements reflected a $310,000
note payable to the limited partner (petitioner) for its yearend
financial statements for 1993 through 1998.
Petitioner contends that the contributions of capital were
from her savings. She also contends that the loan balances shown
as due her on the books of MCU and DDC could be attributable to
accumulated or accrued interest on existing loans and liability
transactions other than loans. We find curious, however,
petitioner’s contention that she had enough money in personal
savings to fund these transactions. The only other source of
petitioner’s income mentioned in the record (outside her
involvement with Mary Catherine) was her position as a part-time
dental assistant. More significantly, petitioner did not provide
7 Petitioner was the sole shareholder of MCU.
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