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Berger prepared the Sley Corporations’ tax returns based on
the books and records of the Sley Corporations, primarily the
general ledger and the trial balances.19 Berger did not
routinely verify the general ledger and the trial balances
against supporting documents before preparing the corporate tax
returns; Berger’s firm was not retained to do any audit work on
behalf of the Sley Corporations. Baybrook was Berger’s principal
contact at the Sley Corporations and the person who provided
Berger with information; petitioner was the secondary contact
person. Berger did not have any business discussion with Betsy
about the Sley Corporations until late 1986. Berger had access
to all of the Sley Corporations’ books and records that he asked
for.
Berger did not give Baybrook instructions about how to
report transactions or how to define expenses for the Sley
Corporations.
Berger was aware that Beatrice, Betsy, and Ben were
receiving six-figure salaries from the Sley Corporations; Berger
did not know how the salary structure was established, who
established the salary structure, or what Beatrice, Betsy, and
19 A trial balance is a listing of all account balances.
It provides a means of testing whether total debits equal total
credits for all accounts. Generally, trial balances are used to
prepare financial statements. Skousen et al, Financial
Accounting 62, 758 (4th ed. 1991).
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