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investment, David asked Rory to lend petitioner $300,000. Rory
liquidated the Joint Tenancy Account and lent $300,000 to
petitioner. Petitioner then invested the $300,000 in USM. On
April 24, 1989, David executed, on behalf of petitioner, a
promissory note in favor of Rory. The note obligated petitioner
to repay, on April 24, 1994, the $300,000 and 10 percent interest
compounded annually.
The USM investment initially performed as expected. USM
made the first two payments on schedule. In October of 1989,
however, the payments stopped. In November of 1989, David
conducted additional investigations of USM and concluded that the
business was a sham, and that petitioner's funds had not been
invested. In December of 1989, David demanded a $300,000 refund.
Soon thereafter, David learned that the USM representative had
embezzled the $300,000, and that USM had filed for bankruptcy
protection. Petitioner did not recover its $300,000 investment.
III. Filing of Estate Tax Return
On October 23, 1989, petitioner mailed a Form 4768
(Application for Extension of Time to File U.S. Estate (and
Generation-Skipping Transfer) Tax Return and/or Pay Estate (and
Generation-Skipping Transfer) Tax(es)). On the form, petitioner
requested an extension of time, until April 28, 1990, to file a
return and an extension of time, until October 28, 1990, to pay
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