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Government consulting, with the law firm of Dawson and Harding in
Las Vegas, Nevada. His wife Ruth Dawson (Mrs. Dawson) is a
teacher and was employed by the Clark County School District
during the taxable years at issue. On their 1983 joint Federal
income tax return, petitioners reported gross income of wages,
interest, dividends, capital gains, and other sources in the
amount of $894,414. Consequently, in the absence of significant
deductions or credits, they would be subject to the payment of a
substantial amount of Federal income taxes for 1983.
During 1983, petitioner's law firm experienced a dramatic
increase in profits resulting from its participation in
litigation involving a fire at the MGM Hotel. Petitioner was
aware of this windfall early in the year, and sought investments
for his income. After reading an advertisement in a local
newspaper that promised tax sheltered investments with a tax
write-off ratio of 4 to 1, petitioner contacted Michael Southard
(Southard) of the Mission Company. At their first meeting,
Southard introduced petitioner to Arthur Geldbach (Geldbach), a
self-described specialist in tax sheltered investments and
financial consulting. Based solely on Southard's recommendation
and Geldbach's promotional material, petitioner hired Geldbach to
provide him and his law partner Samuel Harding with financial
planning services. For his services, petitioner paid Geldbach an
initial fee of $4,000.
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