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services at Muttontown, local pharmacy bills, pediatric medical
bills, medical insurance for family members, credit card bills,
housepainting, food, and other personal expenses. On March 16,
1985 petitioner established an irrevocable trust for her son,
Micha Meyer. Furthermore, on that date her husband named her as
trustee of a trust established for their daughter, Bethany Meyer.
In January 1989 petitioner cashed a total of $14,000 in
checks issued to her by AED. Mrs. Meyer deposited $33,888.78
into her Norstar Bank checking account throughout 1989.
Petitioner also deposited $1,500 monthly rental payments received
from a tenant residing in a cottage located on the Muttontown
property into a separate personal Norstar Bank account during
1989.
On May 14, 1990, petitioner and her husband executed and
filed a Form 1040 joint tax return prepared by Mr. Meyer's
accountant for the calendar year 1989. The return reported the
following amounts for adjusted gross income, Schedule A
deductions, Schedule C gross receipts, taxable income and tax
due:
Adjusted Gross Income..............$16,247.00
Schedule A deductions................6,181.00
Schedule C gross receipts...........36,000.00
Taxable Income......................(3,934.00)
Tax Due..................................0
The return included a clearly visible deduction of $19,753 on
line 29 of the Schedule C attached to the Form 1040. Petitioner
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