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liability. She also used the proceeds for living expenses and
Karen's college tuition.
Petitioner filed in bankruptcy after the lender of the home
equity loan threatened to foreclose on her residence. The
bankruptcy proceedings were terminated when petitioner found a
buyer for her residence.
Tax Return Preparation
Stanley J. Gelda (Gelda) prepared the Jacobys' U.S.
Individual Income Tax Returns (Forms 1040) for the years in
issue. Gelda has been a certified public accountant since 1963,
and he has prepared tax returns for individuals and businesses
since 1954.
Gelda has had a long affiliation with the Jacoby family.
Gerald's parents retained Gelda's firm to provide tax and
accounting services in the 1960's when they organized their
automobile parts distributorship. When Gerald formed Ajac, Gelda
handled Ajac's tax and accounting work. As Gerald formed or
acquired more businesses, Gelda provided accounting services for
them as well.
Gelda also advised the Jacobys in personal tax matters, and
he prepared the Jacobys' income tax returns from 1963 through
1986. The Jacobys filed joint income tax returns for the taxable
years 1975-86. (We have concluded that the returns for 1978 and
1980 were joint returns.) The record is not clear as to their
filing status in prior years.
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