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friend of Harvey and Arlene. Arlene liked Kreindler and trusted
him.
Harvey did not explain petitioners' tax returns to Arlene
when he brought the returns for her to sign, which occurred
sometimes early in the morning, when Arlene was not at her best
due to a chronic illness, and sometimes late at night when she
came in after reviewing a theater performance. Arlene would
therefore call Kreindler when she had questions. Kreindler would
assure Arlene that since he himself had signed the returns,
Arlene could be assured that they were all right.
In 1986, petitioners sold their Hewlett Bay Park house for
$725,000. It was Arlene's understanding that petitioners had to
sell the house to "pay off taxes to the IRS". Of the proceeds,
$305,000 were used to buy a house in Atlantic Beach, title to
which Arlene insisted be placed in her name alone because she
didn't know what Harvey's obligations were and she wanted to be
protected against claims of his creditors. The increase in the
value of the Hewlett Bay Park house from approximately $118,000,
when purchased in 1973, to approximately $725,000, when sold in
1986, was unrelated to petitioners' putative tax savings from tax
shelter deductions in the relevant years.
Arlene received the proceeds from the sale of certain
property which her father had owned, and on which she had paid
approximately $800 per year nominal real estate taxes for a
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