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without making any attempt to calculate the correct amount or
verify their accuracy. The corporate tax returns for the years
1989 and 1991 were signed by Mr. McGirl. The record does not
reflect who signed the 1990 corporate tax return. The corporate
tax returns made no reference to any business activity other than
the Yogurt Station for all of the years in issue.
Petitioners' Joint Federal Income Tax Returns
Mr. Lauth prepared each of petitioners' joint Federal income
tax returns (joint tax returns) for the years 1989 through 1991.
The information reflected on these joint tax returns was provided
to Mr. Lauth by Mr. McGirl in the form of a single sheet of paper
setting forth total income and deduction figures. Petitioners
reported the following items of income, adjustments to income,
itemized or standard deductions, and deductions for
exemptions on their joint tax returns for the years in issue:
1989 1990 1991
Yogurt Station wages $13,925 $19,800 $20,800
Taxable interest income 163 --- 328
Dividend income 2,348 2,911 2,550
Capital gain (loss) (286) --- 8,645
Other income --- 21,500 ---
Yogurt Station income (loss) 1,899 (17,135) (2,206)
Total income 18,049 27,076 30,117
Adjustments to income 4,000 4,750 5,063
Adjusted gross income 14,049 22,326 25,054
Itemized/standard deductions 6,036 5,540 5,700
Exemptions 4,000 4,100 4,300
Taxable income 4,013 12,686 15,054
Tax 604 1,916 2,261
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