Sherburne M. Edmondson, Jr. and Diane L. Edmondson - Page 5

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          to explore the possibility of investing in an import/export                 
          business.                                                                   
               On February 11, 1991, Mr. Edmondson asked petitioner to sign           
          a joint 1988 tax return.  She signed the return voluntarily,                
          without any force or threat from Mr. Edmondson.  Because she                
          trusted Mr. Edmondson to prepare the return  correctly, she signed          
          the return without reviewing it.  Indeed, throughout petitioner's           
          marriage to Mr. Edmondson, she consistently signed joint tax                
          returns without reviewing them.                                             
               In April 1992, petitioner and Mr. Edmondson separated.  Mr.            
          Edmondson agreed to give petitioner $500 a month for 36 months and          
          took responsibility to repay one of her two student loans. The              
          Edmondsons divorced in November 1993.                                       
               On October 25, 1994, Mr. Edmondson signed a notarized document         
          (an indemnity), whereby he agreed to be solely responsible for the          
          payment of all taxes incurred during his marriage with petitioner.          
          Seattle House                                                               
               Prior to marrying petitioner, Mr. Edmondson owned a house in           
          Seattle with his first wife.2 Mr. Edmondson lived in the house              
          through 1981.  Thereafter, the house was rented until its sale on           
          July 29, 1988.  The sale resulted in a $30,948.64 gain to Mr.               
          Edmondson. The proceeds from the sale were used to pay the                  
          Edmondsons' living expenses as well as debts of their failed record         

               2    Petitioner was aware that Mr. Edmondson had owned the             
          Seattle house.                                                              




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