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to do the bookkeeping. At that time, as Mr. Jones was also
looking for an accountant, petitioner recommended Mr. Singleton
to him.
In her dress shop, petitioner had full responsibility for
buying the inventory and selling it, areas in which she had skill
and interest. During 1980, the dress shop's first year,
petitioner grossed $78,207. Petitioner acquired, on her own, the
dress shop's first (and continuing) inventory and opened on her
own a separate bank account for the dress shop at the Citizens
State Bank in Sealy, Texas.
Mr. Jones did not write checks on petitioner's dress shop
bank account, and she did not keep him apprised of the operations
of the dress shop. Occasionally, petitioner used the household
account for transactions involving the dress shop.
During its first year, petitioner operated the dress shop in
leased space, but petitioner subsequently moved the shop to a
building she purchased in 1981 for $42,500. The building
afforded a larger space and, during 1981, petitioner opened a
bridal shop in addition to the dress shop. During 1981, the
dress and bridal shops employed three to four employees per day.
During 1981, the dress and bridal shops grossed $128,549.67,
almost double the first year's results, and reported a profit.
After opening the bridal shop, petitioner opened a third
business, a tea room that served lunch.
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