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amount for which each payroll check should be written and later
told her when the amounts of the payroll checks changed. See
infra Salaries and Dividends. Baybrook was not told the reasons
for the changes. When petitioner gave these instructions to
Baybrook, he did not indicate to her that he was passing on
instructions from the Sley Corporations’ officers. Baybrook also
prepared the Sley Corporations payroll tax returns; petitioner
signed them. Petitioner signed Sley Corporations tax returns as
an “officer”; the “title” he used was “attorney”.
Baybrook prepared summary financial statements of
petitioner’s income based on the books she kept for the Sley
Corporations and for Grossman & Flask; Baybrook did not intend
that these summaries be all-inclusive, but she tried and intended
to include everything that occurred “inside the office”--that is,
the income from Grossman & Flask and from the Sley Corporations.
Baybrook was not asked by petitioner to prepare the summary
financial statements; Baybrook prepared them as a courtesy to
Harvey J. Berger, hereinafter sometimes referred to as Berger,
the accountant who, from 1980 on, prepared the Sley Corporations’
tax returns and petitioner’s and Betsy’s joint tax returns.
Baybrook gave the summary financial statements to petitioner so
that he could make sure that all items of income and deductions
were included. Baybrook was never asked to prepare a schedule of
constructive dividends.
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