Craig E. and Debbie A. Brown - Page 6

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               Thereafter, petitioner met Sam Morris (Morris), a Las Vegas            
          accountant, at a conference in Los Angeles, California. In                  
          response to questions by Morris, petitioner explained his                   
          business and the types of expenses he incurred. Morris offered to           
          review petitioners' returns to see whether petitioner could take            
          advantage of certain deductions. Petitioner checked Morris'                 
          references and found nothing unusual. Sometime in 1991,                     
          petitioner sent a 30-pound box by Federal Express to Morris'                
          office in Las Vegas, Nevada. Petitioner kept no receipt or list             
          of the documents contained in the box, but he believes the box              
          contained all of his tax records for 1988 through 1991, including           
          credit card statements, bank statements, receipts, copies of                
          prior tax returns, and his daily log for those years. Morris                
          prepared, and petitioners signed and filed, a Form 1040X (the               
          amended return) for taxable year 1989. When Morris presented                
          petitioner with the amended return, petitioner did not review it            
          in depth prior to signing and filing it. Respondent received the            
          amended return on April 3, 1992. On the Schedule C for the                  
          computer consulting activity attached to the amended return,                
          petitioner reported gross receipts in the amount of $75,312 and             
          claimed the following expenses:                                             
                    Expense        Amount claimed                                     
               Car and truck            $3,390                                        
               Depreciation              3,591                                        
               Insurance                 1,412                                        
               Other interest            3,277                                        
               Legal/professional        1,301                                        
               Rent/lease machinery and                                               
               equipment                    50                                        



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