Edward and Ruth Kelly - Page 20

                                                 - 20 -                                                   

            petitioners' income tax returns:  "petitioner Edward Kelly                                    
            justifiably relied upon the expertise of his Certified Public                                 
            Accountant and, taking the matter far beyond normal prudence and                              
            care, counsel for the taxpayer in the Groetzinger case."                                      
                  The record does not disclose the details of Mr. Kelly's                                 
            consultation with Baymiller.  We know from Auerbach's testimony,                              
            however, what information Auerbach elicited from Mr. Kelly, and                               
            how it influenced the accountant's advice.  In concluding that                                
            ordinary loss treatment was warranted, Auerbach apparently                                    
            attached decisive importance to Mr. Kelly's statement that                                    
            registration as an options principal qualified him to establish                               
            his own business as an options dealer.  The petition in docket                                
            No. 28233-91 contains a similar allegation:  "Kelly is a licensed                             
            options dealer".  Considering the importance of this allegation                               
            to Mr. Kelly's theory of the case, one would have expected him to                             
            present evidence verifying its accuracy.  He did not.  When                                   
            Mr. Kelly was asked as a witness to explain what the status of                                
            registered options principal entails, he described                                            
            responsibilities for reviewing customer accounts and monitoring                               
            compliance with institutional rules.  On brief Mr. Kelly asserts                              
            only that he was "licensed in the securities business", and in                                
            his account of how Auerbach formed his opinion based on the                                   
            information Mr. Kelly supplied, we find a curious qualification:                              
            "Mr. Auerbach decided that, in view of (A) Mr. Kelly's ROP                                    

Page:  Previous  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  Next

Last modified: May 25, 2011