Arnold P. Mordkin and Cindy Mordkin - Page 20

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               Petitioners filed a Form 2688, Application for Additional              
          Extension of Time to File U.S. Individual Income Tax Return dated           
          August 9, 1991, requesting an additional two-month extension of             
          time to file their 1990 return.  That application indicated that            
          petitioners needed the additional time to "collect and summarize            
          the information necessary to file an accurate return."  That                
          application was not signed by petitioners, was signed by "Edward            
          A. Cronick CPA" as preparer of the application, and was sent to             
          the Service.                                                                
               Petitioners filed a Federal income tax return for 1990 dated           
          October 14, 1991.  In that return, petitioners reported total               
          salaries of $359,962.  The portion of those reported salaries               
          that was attributable to petitioner's legal practice was                    
          $349,000.  In their 1990 return, petitioners reported a loss of             
          $48,082 attributable to petitioner's rental activity at Crest-              
          wood.  Petitioners used that reported loss of $48,082 to offset             
          other income reported in their 1990 return.  Petitioners' 1990              
          Federal income tax return showed a tax liability of $70,742.                
          That return was signed by petitioners as taxpayers and was signed           
          by "Edward A. Cronick, CPA" as return preparer.                             
               Petitioner did not have any formal tax or accounting train-            
          ing.  However, petitioner was a sophisticated businessman and had           
          been involved in several tax shelters that were challenged by the           
          Service.  In addition, during the board meeting held in January             

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